Banking on a holistic approach

Federal banking regulators are launching a consultation on revising capital and liquidity requirements for smaller banks to better match the size and scope of their operations.

The Office of the Superintendent of Financial Institutions (OSFI) published a discussion paper Thursday, seeking feedback on possible revisions to the capital regime for smaller banks.

The paper sets out a proposed framework for categorizing smaller banks, and the capital and liquidity requirements for each category.

“Comments received in response to this discussion paper will be used to further develop the segmentation approach, including the process for the migration of [banks] between categories,” it says. “This feedback will also be used to inform the finalization of a revised set of Pillar 1 capital and liquidity requirements…”

OSFI is aiming to finalize the revised requirements for adoption by the first quarter of 2022, and to issue a final set of rules by December 2020.

In future phases, it will also be proposing tailored risk management and disclosure expectations for smaller firms.

Feedback on the initial consultation is being sought by Sept. 27.