Business and Powers - Commercial lending limit - osfi-bsif.gc.ca

OSFI's past practice has been to set higher commercial loan limits on the basis of a percentage of total assets. OSFI will continue this ... Skiptomaincontent Skiptosecondarymenu BusinessandPowers-Commerciallendinglimit PageContent AlternativeFormats PDF,25kB DocumentProperties TypeofPublication:AdvisoryFootnote1 Category:Regulatory&Legislative Issued:February2003 No:2003-01 Introduction: Thisadvisoryprovidesanoverviewofhowthe OfficeoftheSuperintendentofFinancialInstitutions(OSFI) administersandinterpretstheprovisionsofthefederal financialinstitutionslegislationregardingthegrantingofa commerciallendinglimitinexcessofthelimitof5percentof totalassets.Theissueiswhetherthathighercommercial lendinglimitthattheSuperintendentmaygranttoafederally regulatedinsurance,trustorloancompany,cooperativecredit association,orinsuranceholdingcompany(hereinafterreferred toasafederallyregulatedentityorFRE),couldbedetermined onabasisotherthanapercentageoftotalassets. LegislativeReferences: Section462oftheTrustandLoanCompaniesAct Sections504and980oftheInsuranceCompaniesAct Section399oftheCooperativeCreditAssociationsAct Interpretation: TheseprovisionsrequireaFREtoobtainthe approvalofSuperintendentintheeventtheFREwishestohavea commerciallendinglimitinexcessofthe5percentoftotal assetsprescribedbylegislation.Thelegislativeprovisionsdo notrequirethatthehigherlimitbebasedonapercentageof assets.Infact,thereisnoindicationinthelegislationon whatbasisahigherlimitshouldbegranted,therebyproviding theSuperintendentwithadiscretionaryauthoritytosetoutthe basisunderwhichthehigherlimitwouldbeapplied. OSFI’spastpracticehasbeentosethighercommercialloan limitsonthebasisofapercentageoftotalassets.OSFIwill continuethispracticeunlessotherwiserequestedbytheFRE. Requestsforhighercommercialloanlimitsonabasisotherthan thetotalpercentageofassetswouldbeconsideredona case-by-casebasis,takingintoaccountthefollowing: whethertheelementthatwouldbeusedtocalculatethe higherlimitcouldbeeasilycalculatedandmonitored,e.g., regulatorycapital;and whethertheuseofthatelementwouldsetahigherlimitthat isacceptabletoOSFI,havingregardtotheFRE’scapacityand experiencetomakecommercialloansandtocontrolandmonitor suchloanportfolio. WhenmakinganapplicationfortheSuperintendent’sapprovalofa highercommercialloanlimit,aFREshouldrefertoOSFI’s GuidelineNo.E-2,CommercialLendingCriteria,forguidanceonthe natureofinformationtobeprovidedinsupportofits application. Footnotes Footnote1 AdvisoriesdescribehowOSFIadministersand interpretsprovisionsofexistinglegislation,regulationsor guidelines,orprovideOSFI'spositionregardingcertainpolicy issues.Advisoriesarenotlaw;readersshouldrefertothe relevantprovisionsofthelegislation,regulationorguideline, includinganyamendmentsthatcameintoeffectsubsequenttothe Advisory'spublication,whenconsideringtherelevancyofthe Advisory. Returntofootnote1referrer ModifiedDate: 2013-06-13 Secondarymenu RegulationandGuidance ActsandRegulations Guidance TableofGuidelines TableofAdvisories ApprovalsandPrecedents ApplicationandApprovalGuides RegulatoryandLegislativeAdvisories LegislativeRulings CapitalRulings NameRequest RiskAssessmentandIntervention SupervisoryPractices GuidetoIntervention TrustAgreements RegulatoryData FilingCorporateReturns FilingFinancialReturns ViewingFinancialData Anti-moneyLaunderingandCompliance Anti-moneyLaundering Anti-terrorismFinancing Sanctions Messages IndustryNotices WebTools WhoWeRegulate