OSFI unwinds regulatory adjustments for banks subject to ...

Today, the Office of the Superintendent of Financial Institutions (OSFI) announced the unwinding of regulatory adjustments to the market risk ... Skiptomaincontent Skiptosecondarymenu OSFIunwindsregulatoryadjustmentsforbankssubjecttomarketriskcapitaladequacyrules PageContentMediaContact OSFI–PublicAffairs343-550-9373NewsReleaseForImmediateReleaseOTTAWA─March16,2021─OfficeoftheSuperintendentofFinancialInstitutionsToday,theOfficeoftheSuperintendentofFinancialInstitutions(OSFI)announcedtheunwindingofregulatoryadjustmentstothemarketriskcapitalrequirementsforbanks,effectiveMay1,2021.Oneyearago,OSFIintroducedextraordinaryregulatoryadjustmentstosupportthefinancialandoperationalresilienceoffederallyregulatedfinancialinstitutions(FRFIs)inresponsetotheinitialwaveoftheCOVID-19pandemic.ThesemeasuresincludedareductionintheStressedValueatRisk(“SVaR”)multiplier,acomponentofthemarketriskcapitalrequirementsthatensuresthataminimumamountofcapitalisheldagainststressperiods.Atthebeginningofthepandemic,thevolatilityincapitalmarketsincreasedsuchthatthelevelofadditionalconservatismachievedthroughtheSVaRmultiplierwastemporarilynotneededandbankswerepermittedtoreducethelevelofthemultipliersused.Throughoutthepastyear,OSFIhascontinuedtomonitorbanks’marketriskcapitalrequirementsandtheimpactoftheSVaRmultipliers.Nowthatfinancialmarketshavestabilized,theleveloftheSVaRmultipliersappliedbybankswillalsobereturnedtowhattheywerepre-pandemic.OSFI’sregulatoryandsupervisoryadjustmentswillcontinuetobe credible,consistent,necessaryandfit-for-purposeintheCanadiancontext.OSFIwillcloselymonitorconditionsandremainsreadytotakeanyfurtheraction,includingunwindingtemporarymeasures,asrequired.Forspecificguidance,pleaseseethe letterissuedtoFederallyRegulatedDeposit-TakingInstitutions(DTIs)subjecttomarketriskcapitalrequirements.Quote“TheuncertaintycausedbythefirstwaveoftheCOVID-19pandemicmadeitnecessarytoadjustcertainregulatoryrequirementssuchastheStressedValueatRiskmeasure.Withmarketconditionsstabilizing,it’sfittingthattheSVaRmultipliershouldreturntoitspre-pandemicleveltoo.”-BenGully,AssistantSuperintendent,RegulationSectorQuickFactsThemeasuresintroducedbyOSFIattheendofMarch2020providedrelieftobanks’capital,liquidityandreportingrequirements.Inaddition,suchmeasuresdelayedtheimplementationdeadlinesforanumberofplannedregulatorychanges.TheSVaRmultiplierispartofOSFI’sCapitalAdequacyRequirements,aframeworkforassessingthecapitaladequacyoffederallyregulatedbanks,bankholdingcompanies,federallyregulatedtrustandloancompaniesandcooperativeretailassociations.ThetemporaryreductionintheSVaRmultiplierbytwonotches–fromamultiplierofatleastthreetoamultiplierofatleastone–wasintroducedonMarch27,2020toallowinstitutionsflexibilityinaddressingstressedconditionstriggeredbytheCOVID-19pandemic,whilepromotingfinancialresilienceandstability.Whileappropriatewheninstituted,suchaccommodationwasalwaysintendedtobetemporaryinnatureandtoeventuallybeunwound.AssociatedLinks OSFIupdatetoCOVID-19-relatedregulatoryflexibilityformarketriskcapitalrequirements COVID-19Measures:FAQsforFederallyRegulatedDeposit-TakingInstitutions OSFIannouncesregulatoryflexibilitytosupportCOVID-19efforts(March27,2020newsrelease) StatementfromtheSuperintendentonmeasurestakentosupporttheresilienceoffinancialinstitutions(April3,2020) OSFICOVID-19updatesAboutOSFIThe OfficeoftheSuperintendentofFinancialInstitutions (OSFI)isanindependentagencyoftheGovernmentofCanada,establishedin1987,toprotectdepositors,policyholders,financialinstitutioncreditorsandpensionplanmembers,whileallowingfinancialinstitutionstocompeteandtakereasonablerisks.OSFIsupervisesmorethan400federallyregulatedfinancialinstitutionsand1,200pensionplanstodeterminewhethertheyareinsoundfinancialconditionandmeetingtheirprudentialrequirements.MediaContactOSFI–[email protected]​ ModifiedDate: 2021-03-26 Secondarymenu AboutUs OurHistory Mandate ExecutiveBiographies Newsletters ReportsandAccountability WhoWeRegulate JobOpportunities