Capital Equivalency Deposit

Document Properties

  • Type of Publication: Guideline
  • Date: January 2000
  • Date Revised: April 2002
  • No: A-10
  • Audiences: FBB

Introduction

This guideline addresses the issue of capital equivalency deposits for authorized foreign banks in respect of their business in Canada – foreign bank branches (FBBs).

Pursuant to subsection 534(3) of the Bank Act (the Act), every FBB must deposit unencumbered assets with an approved financial institution in Canada (the Depository) before the Superintendent will issue an Order to Commence and Carry On Business. This deposit is called a capital equivalency deposit (CED) and subsequent to the Order to Commence and Carry On Business, the FBB must maintain the required CED at all times, regardless of reporting frequency.

A lending branch, which is subject to the restrictions and requirements of subsection 524(2) of the Act, is required to deposit and maintain a CED of $100,000. For a full-service branch, the initial CED is set at $5 million, and must be maintained at the greater of $5 million or five per cent of Canadian liabilities, as required by subparagraph 582(1) of the Act. Where a foreign bank has received ministerial approval for the voluntary liquidation and dissolution of a deposit-taking institution and is in the process of establishing a full-service branch, the minimum $5 million deposit, as required by subparagraphs 534(3)(a)(ii) and 582(1)(b)(i) of the Act, may be waived. However, the full-service branch will continue to be required to maintain a deposit equal to five per cent of Canadian liabilities as required by subparagraph 582(1)(b)(ii) of the Act.

Pursuant to subsection 617(b) of the Act, the Superintendent may require the FBB to maintain additional assets with the approved Depository where in the opinion of the Superintendent they are necessary to protect depositors and creditors of the FBB.

Deposit Agreement

An application by a foreign bank to establish an FBB must contain a statement identifying the proposed Depository and the general terms and conditions of the deposit agreement. The deposit agreement must be signed by the FBB, the Depository and the Superintendent. A pro forma Standard Form Deposit Agreement is attached as Appendix I. The Depository cannot be affiliated with the FBB. The deposit agreement may not be terminated without the prior written approval of the Superintendent. Requests to terminate the deposit agreement must be made in writing at least 30 days before the proposed termination date. No termination shall be effective until another financial institution has been designated as Depository by the FBB and approved by the Superintendent.

Qualifying Assets

The assets forming the CED must be unencumbered and may not be used for securities lending purposes. To ensure the quality of the CED, the FBB must receive prior approval from the Superintendent to add, to release, or to otherwise change the assets where the class of assets is not found on the list of pre-approved asset classes in Schedule "A" of the Standard Form Deposit Agreement. Examples of assets that may qualify for inclusion in the CED are bankers’ acceptances and highly liquid investment-grade securities. Approval of other types of assets is dependent on both the quality of the assets and the financial strength of the foreign bank and its FBB.

Additions, Releases and Substitution of Assets

Assets falling into a class not found on the list of approved assets cannot be added to the CED without the Superintendent's approval. Requests to add assets not found on the list of pre-approved classes in Schedule A should describe the type and amount of securities to be added.

Where the FBB seeks to withdraw assets, its request should include the proposed time frame of the withdrawal and must be accompanied by a signed statement by the principal officer of the FBB stating that the withdrawal would not cause the CED to fall below the required level. A sample of a withdrawal request and accompanying declaration can be found as Appendix II.

Pre-approved assets may be replaced with other pre-approved assets of equivalent value without the Superintendent's approval.

Calculating the CED

For a full service FBB, the CED is determined by total liabilities. Total liabilities are defined as all liabilities of the FBB in respect of its business in Canada as reported on its monthly balance sheet, including amounts payable to affiliates of the FBB and certain off-balance sheet items, but excluding accrued expenses and amounts payable to the head office.

The following trade-related off-balance sheet items, which are considered irrevocable contingent liabilities, must be included as liabilities of the FBB:

  1. direct credit substitutes;
  2. sale and repurchase agreements;
  3. transaction-related contingents; and
  4. short-term self-liquidating trade-related contingents.

Since these off-balance sheet items are contingent in nature, their face amount may not necessarily reflect the amount of the credit risk. To approximate the potential credit exposure, the face amount of the instrument shall be multiplied by a credit conversion factor to derive a credit equivalent amount. The credit conversion factors for these items are:

Off-balance sheet items Conversion factor
(i) direct credit substitutes 100 per cent
(ii) sale and repurchase agreements 100 per cent
(iii) transaction-related contingents 50 per cent
(iv) short-term self-liquidating trade-related contingents 20 per cent

Reporting

The Depository must provide a monthly statement to the FBB of all transactions affecting the CED. The statement shall list securities on deposit and value them at the lesser of book or market as of the statement date. The full-service branch must also forward a copy of the monthly statement to the Superintendent. For a lending branch, the FBB must provide an annual statement to the Superintendent.

A full-service branch must record daily the amount of liabilities requiring CED coverage. At each quarter end, it must calculate and report to OSFI the average of these liabilities for the period (Appendix III). Any required increase in the CED must be made within the first seven business days of the following month.

Pursuant to section 600 of the Act, the Superintendent may require any other form of reporting as deemed necessary.

Determining Market Value

The definition of market value for assets included as part of the CED is generally considered as the following:

  1. for bonds and other debt securities that traded on an exchange on the valuation date, the market value is the price at which the last trade was made;

  2. for bonds and other debt securities that did not trade on an exchange on the valuation date, the market value is the bid price at the close of business; and

  3. for municipal securities that are not traded on an exchange, the market value is that provided by a bond valuation service or generated by a computer program that has proven to accurately estimate the market value based upon the applicable yield to maturity, term to maturity, and coupon adjustment factor, or upon a bona fide quote from a bond dealer.

Further Information

Reporting forms for the CED are described in the Manual of Reporting Forms and Instructions for Deposit-Taking Institutions. This manual is available in hard copy format and may be obtained by contacting Stephane Dupel by e-mail at pub@osfi-bsif.gc.ca or by facsimile at (613) 952-8219.

The completed Standard Form Deposit Agreement (Appendix I) must be submitted to the Foreign Bank Branch Supervision Division.

Once OSFI approves the Standard Form Deposit Agreement, the Deposit Administration Unit will be responsible for processing any requests related to the deposit account such as the release of assets. Questions regarding this process may be forwarded to the Compliance Securities Analyst, at (613) 990-6282.

Questions on this guideline should be forwarded to the Foreign Bank Branch Supervision Division at (613) 990-6032, or e-mail fbbs@osfi-bsif.gc.ca.

Appendix I

STANDARD FORM DEPOSIT AGREEMENT

DEPOSIT AGREEMENT MADE THE Line to fill out______ DAY OF Line to fill out__________, Line to fill out_____ BETWEEN (AUTHORIZED FOREIGN BANK) AND (CANADIAN FINANCIAL INSTITUTION)

THIS DEPOSIT AGREEMENT made in triplicate on the Line to fill out_____ day of Line to fill out_____________,

BETWEEN:

Line to fill out__________________________, a foreign bank duly organized and existing under the laws of Line to fill out___________________ (hereinafter called the "Authorized Foreign Bank")

AND:

Line to fill out__________________________, a Canadian financial institution incorporated under the laws of Line to fill out___________________ (hereinafter called the "Depository")

AND:

The Superintendent of Financial Institutions

(hereinafter called the "Superintendent")

WHEREAS the Authorized Foreign Bank is authorized by an order of the Minister of Finance (hereinafter called the "Minister") made under the Bank Act (hereinafter called the "Act") to establish a branch in Canada to carry on business in Canada;

WHEREAS the Act requires a foreign bank authorized under the Act to establish a branch in Canada to carry on business in Canada to maintain on deposit with a Canadian financial institution approved by the Superintendent pursuant to a deposit agreement entered into with the prior approval of the Superintendent unencumbered assets of a type approved by the Superintendent having a total value determined in accordance with the Act.

NOW THEREFORE the parties hereto agree with one another as follows:

APPOINTMENT OF DEPOSITORY

  1. The Authorized Foreign Bank appoints, as depository, the Depository to hold for the purposes of the Act the assets that the Authorized Foreign Bank may deposit with the Depository pursuant this Agreement.

DEPOSITED ASSETS

    1. Subject to subclause 6 (b) Text for screen readers: b = 2, the Authorized Foreign Bank shall have the sole responsibility to deposit with the Depository assets so that, at any time, the total value of those assets, when determined on the basis prescribed under the Act, is at least equal to the value of the assets that the Act requires the Authorized Foreign Bank to maintain on deposit at that time.

    2. Assets deposited under this Agreement shall be held by the Depository in an account identified in its records as separate and distinct from other accounts of the Depository.

    3. The Authorized Foreign Bank shall ensure that assets deposited under this Agreement are at the time of deposit, and remain, free of all liens, charges and encumbrances of any nature except for the charge customarily required to be given by the relevant participant in the CDS Clearing and Depository Services Inc. under the rules governing participation in the CDS Clearing and Depository Services Inc. on an asset deposited, and recorded in book-based form, with the CDS Clearing and Depository Services Inc. The Depository shall have no responsibility for ensuring that assets deposited are at the time of deposit, and remain, free of all liens, charges and encumbrances of any nature.

    4. The Depository acknowledges and agrees that, subject to clause 17,

      1. it has no right, title, interest or claim of any kind in or to any of the assets deposited with it pursuant to this Agreement; and

      2. it shall not allege any such right, title, interest or claim.

    5. Assets deposited under this Agreement may not be used as part of a securities lending program.

DEPOSITING, VARYING, EXCHANGING OR WITHDRAWING ASSETS

    1. Subject to clause 2 and subclause (b) Text for screen readers: b = 2, prior to depositing an asset or withdrawing a deposited asset, the Authorized Foreign Bank shall obtain the written approval of the Superintendent. Upon receipt of a copy of that written approval, the Depository shall follow the written direction of the Authorized Foreign Bank in respect of the asset.

    2. Unless the Superintendent has otherwise directed by written notice to both the Authorized Foreign Bank and the Depository, the Authorized Foreign Bank may, without the prior written approval of the Superintendent,

      1. deposit an asset listed in Schedule "A", or

      2. withdraw a deposited asset listed in Schedule "A" on condition that the asset withdrawn is replaced, either prior to or simultaneously with, an asset or assets listed in Schedule "A" the market value of which on the date of the withdrawal is, and is certified by the Authorized Foreign Bank to the Depository to be, at least equal to the market value of the asset withdrawn.

ASSETS IN DEPOSITORY'S NAME

  1. Subject to clause 8, the Depository shall register in its name or, subject to the written approval of the Superintendent, in the name of its nominee, any deposited asset that can be issued in registered form.

    [Notwithstanding the foregoing but subject to the prior approval of the Superintendent, the Authorized Foreign Bank may deposit with the Depository, and the Depository shall not be required to register in its name, mortgages on real estate acquired by or on behalf of the Authorized Foreign Bank under an agreement whereby the mortgages are to be administered by a third party.]

POWERS AND AUTHORITY OF DEPOSITORY

    1. Subject to clause 3, the Depository, on the written direction of the Authorized Foreign Bank, shall have full authority to deal with, vary and exchange the deposited assets and to demand, recover, sue for and receive such sums of money which shall hereafter become due or appear to be due or payable or belonging to the Authorized Foreign Bank in connection with such deposited assets, including all dividends and interest which may become due or appear to be due, with power to compromise any claim upon such terms as the Depository, under direction as aforesaid, shall see fit; upon recovery or receipt for the Authorized Foreign Bank and in its name and as its act and deed to give such good and sufficient acquittances as may be requested; and as to the deposited assets so held to exercise and execute all powers vested in the Authorized Foreign Bank by debtors or other obligors specified therein; and also, under direction as aforesaid, for the Authorized Foreign Bank and in its name or otherwise in its behalf, to make purchases and sales of shares, stocks and bonds and other assets deposited or to be deposited under this Agreement; and in that connection, for the Authorized Foreign Bank and in its name and as its act and deed, to give all such assurances, covenants or other documents as shall be required and as the Depository shall see fit; as well as to give receipts in its own name or in the name of the Authorized Foreign Bank for any sums paid, which receipts shall exempt the person or persons paying from all responsibility of seeing to the application thereof.

    2. Subject to the prior written approval of the Authorized Foreign Bank, which approval must not be unreasonably withheld, the Depository may employ agents and counsel (who may be counsel to the Authorized Foreign Bank) and other professional advisors at the expense of the Authorized Foreign Bank.

    3. The Depository may, from time to time,

      1. deal with securities of the same class and nature as may constitute the deposited assets on its own behalf or on behalf of accounts it manages,

      2. subject to Part XI of the Trust and Loan Companies Act (Part XI of the Act), be affiliated with any party to whom or from whom such securities may be sold or purchased, or

      3. use in other capacities knowledge gained in its capacity hereunder without being liable to account therefore in law or in equity except where the use would be detrimental, prejudicial, or adverse to the best interests of the Authorized Foreign Bank.

ACCOUNTABILITY OF DEPOSITORY

    1. Subject to subparagraph (b) Text for screen readers: b = 2, the Depository will exercise its powers and carry out its obligations under this Agreement as Depository honestly and in good faith and in connection therewith will exercise that degree of care, diligence and skill that a reasonable and prudent person would exercise in comparable circumstances.

    2. Where the Superintendent determines that a deposited asset is withdrawn other than in accordance with clause 3, the Superintendent shall so notify the Depository. Within thirty (30) days of the day on which the Depository is notified by the Superintendent, the Depository shall replace that asset with an asset or assets of the kind listed in Schedule "A" so that the market value of the deposited assets on the replacement date is equal to the lesser of:

      1. the total market value of the assets that the Act requires the Authorized Foreign Bank to maintain on deposit on the replacement date; and

      2. the total market value of assets deposited on the day when the deposited asset was withdrawn other than in accordance with clause 3 determined before giving effect to the withdrawal.

      In each instance where the Depository replaces an asset in accordance with this paragraph, the Authorized Foreign Bank shall immediately reimburse the Depository for all loss, damage, expense, and costs incurred by the Depository in respect of the replacement.

DIRECTION OF AUTHORIZED FOREIGN BANK

  1. The Authorized Foreign Bank shall identify to the Depository, in writing, those Authorized Foreign Bank representatives authorized to direct the Depository in respect of a matter under this Agreement. The Depository shall act only upon the written directions of those Authorized Foreign Bank representatives and shall have no duty to verify the appropriateness of any directions which shall be binding on the Authorized Foreign Bank.

CDS CLEARING AND DEPOSITORY SERVICES INC.

  1. Subject to the written approval of the Superintendent, the Depository, on the written direction of the Authorized Foreign Bank, may deposit certain of the deposited assets with CDS Clearing and Depository Services Inc. and shall have the same responsibility for the deposited assets whether in the possession of the Depository or deposited with the CDS Clearing and Depository Services Inc.

PAYMENTS ON ACCOUNT OF AN INTEREST IN REAL ESTATE

  1. Unless the Authorized Foreign Bank and the Depository are otherwise directed in writing by the Superintendent, the Authorized Foreign Bank may collect payments on account of any interest in real estate by way of a lease, mortgage or otherwise deposited with the Depository, provided that the Authorized Foreign Bank shall,

    1. forthwith pay to the Depository any monies collected on account of the principal of any mortgage, and

    2. on or before the tenth day of each month, notify in writing the Depository and the Superintendent of the balance of principal on any mortgage on account of which the Authorized Foreign Bank collected a principal payment and account for all monies collected hereunder, which information shall be contained in a statutory declaration of an officer of the Authorized Foreign Bank.

EXERCISE OF RIGHTS ATTACHED TO AN ASSET

  1. Unless the Depository is otherwise directed in writing by the Superintendent,

    1. the Depository shall hand over to the Authorized Foreign Bank all income upon the deposited assets collected by the Depository as the same is collected; and

    2. the Authorized Foreign Bank shall be entitled at all times to exercise, through such officer or other person designated by it, the right of attending, acting and voting at meetings of corporations or security holders or otherwise in respect of deposited assets and the Depository shall, at the request of the Authorized Foreign Bank, execute and deliver such instruments of proxy or attorney as may be reasonably required to enable the Authorized Foreign Bank through such officer or person to exercise such rights.

STATEMENT OF ASSETS

    1. Unless the Superintendent otherwise directs the Depository in writing, the Depository shall, on or before the fifteenth day of each month, or, if the fifteenth day is not a business day of the Depository, on or before the first business day of the Depository following the fifteenth day, and at such other times as requested by notice in writing to the Depository from the Superintendent, file

      1. with the Superintendent, and if the Authorized Foreign Bank so elects, with the Authorized Foreign Bank, a declaration in the form of Schedule "B", or in such other form as may be prescribed by the Superintendent from time to time, together with a diskette containing that information as may be prescribed by the Superintendent from time to time, of all assets deposited with the Depository under this Agreement and other agreements entered into for similar purposes under the Act as at the close of business on the Depository's last business day in the immediately preceding month, and

      2. where the Authorized Foreign Bank does not elect under subparagraph (i) Text for screen readers: i = 1, with the Authorized Foreign Bank a statement containing that information as may be prescribed by the Authorized Foreign Bank from time to time of all assets deposited with the Depository under this Agreement.

    2. Unless the Superintendent otherwise directs in writing, the Depository shall on or before the fifteenth day of January in each year, or, if the fifteenth day is not a business day of the Depository, on or before the first business day of the Depository following the fifteenth day, and at such other times as requested by notice in writing to the Depository from the Superintendent, file

      1. with the Superintendent, and if the Authorized Foreign Bank so elects, with the Authorized Foreign Bank, a declaration in the form of Schedule "C" or in such other form as may be prescribed by the Superintendent from time to time, together with a diskette containing that information as may be prescribed by the Superintendent from time to time, of all assets deposited with the Depository under this Agreement as at the close of business on the Depository's last business day in the immediately preceding month, and

      2. where the Authorized Foreign Bank does not elect under subparagraph (i) Text for screen readers: i = 1, with the Authorized Foreign Bank a statement containing that information as may be agreed upon by the Authorized Foreign Bank and the Depository from time to time of all assets deposited with the Depository under this Agreement.

ACCESS

  1. The Depository shall at all times, upon reasonable notice, permit the Superintendent and the Authorized Foreign Bank access, for purposes of examination, to all assets deposited with the Depository under this Agreement and to the records of the Depository and any agent of the Depository in relation thereto.

COMPENSATION OF DEPOSITORY

  1. The Depository is entitled to reasonable compensation for its services and expenses under this Agreement as may be agreed upon by the Authorized Foreign Bank and Depository, and if no such agreement is reached, either the Authorized Foreign Bank or the Depository may on ten days notice in writing apply to a court of competent jurisdiction to fix the compensation that the Authorized Foreign Bank shall pay the Depository.

INTEREST ON MONIES HELD ON DEPOSIT

  1. The Depository or its affiliate shall pay the Authorized Foreign Bank interest on monies held on deposit under this Agreement at a rate that is not less than the rate paid by the Depository on the same or similar accounts.

AMENDMENTS

    1. The parties may amend this Agreement which amendment shall be valid and binding upon the parties only when evidenced by a written agreement executed by them.

    2. The Authorized Foreign Bank and the Depository shall make those amendments to this Agreement that the Superintendent reasonably requires.

TERMINATION

  1. The Depository and, subject to the prior written approval of the Superintendent, the Authorized Foreign Bank, may terminate this Agreement on at least thirty (30) days notice in writing to the Superintendent and the other party specifying in the notice the date of termination. Upon the date of termination specified in the notice, the Depository shall be discharged from any further responsibilities to carry out the terms provided in this Agreement save for its obligations under clause 17.

APPOINTMENT OF NEW DEPOSITORY

  1. As soon as practicable,

    1. on the Depository ceasing to carry on business, or refusing to act as a depository,

    2. on the Depository becoming insolvent, being deemed insolvent or admitting that it is insolvent within the meaning of any statute, or becoming (whether voluntarily or involuntarily) subject to any proceedings for its winding-up, liquidation or dissolution,

    3. on the Superintendent taking control of the assets of, or taking control of, the Depository under (the Act) (the Trust and Loan Companies Act),

    4. on the Depository defaulting in its duties or obligations or any of them hereunder and not commencing to rectify the default within thirty (30) days after written notice from the Authorized Foreign Bank or the Superintendent specifying the default and requiring the Depository to remedy the same, or

    5. after giving or receiving a notice under clause 16,

    the Authorized Foreign Bank shall appoint another Canadian financial institution in accordance with the Act and the Depository shall execute all documents that the Authorized Foreign Bank shall deem necessary to deposit with that financial institution the assets deposited under this Agreement and transfer in writing to that institution all its rights and obligations under this Agreement, except that the Depository may withhold an amount equal to the aggregate of any unpaid compensation for its services and expenses to the date of the transfer and any losses, damages, expenses and costs owing to the Depository pursuant to subclause 6(b) Text for screen readers: 6(b) = 6(2).

WAIVER

  1. No waiver by any party of any breach of any of the covenants, provisos, conditions, restrictions or stipulations herein contained shall take effect or be binding upon that party unless the waiver is expressed in writing under the authority of that party and, in the case of a waiver by the Authorized Foreign Bank or the Depository, is approved in writing by the Superintendent. Any waiver so given and approved shall extend only to the particular breach so waived and shall not limit or affect any rights with respect to any other future breach.

FURTHER ASSURANCES

  1. Each of the parties hereto shall execute and deliver all such instruments and assurances and do all other acts and things as are necessary to give full effect to carry out their respective obligations under this Agreement.

NOTICES

    1. Notices under this Agreement shall be served either:

      1. personally by delivering them to the party on whom they are to be served at that party's address hereinafter given, provided such delivery shall be during the addressee's normal business hours. Personally served notices shall be deemed received by the addressee when actually delivered as aforesaid;

      2. by telex or facsimile (or by any other like method by which a written and recorded message may be sent) directed to the party on whom they are to be served at that party's address hereinafter given. Notices so served shall be deemed received by the addressee: (i) when actually received by the addressee if received within the normal working hours of the addressee's business day or (ii) at the commencement of the next ensuing business day of the addressee following transmission thereof, whichever is the earlier; or

      3. by prepaid first class mail addressed to the party on whom they are to be served at that party's address hereinafter given, provided that if delivery by prepaid first class mail of any notice is or is likely to be delayed due to interruption or suspension of the postal service because of a mail strike, slowdown or other labour dispute which might affect the delivery of the notice, then the notice shall be effective only if delivered personally or by telex or facsimile (or by any other like method by which a written and recorded message may be sent). Notices so served shall be deemed received on the fifth (5th) day following the day on which they are so mailed.

    2. Unless changed by written notice to the other parties, the address for services of notices hereunder of each of the respective parties shall be as follows:

      Authorized Foreign Bank:

      Telephone:

      Facsimile:

      Depository:

      Telephone:

      Facsimile:

      Superintendent:

      Superintendent of Financial Institutions

      16th Floor, Kent Square

      255 Albert Street

      Ottawa, Ontario

      K1A 0H2

      Attention:

      Facsimile: (613) 952-8219

EXECUTION IN COUNTERPART

  1. This Agreement may be executed and delivered in counterparts, each of which, when so executed and delivered, shall be deemed to be an original; all counterparts together shall constitute one and the same agreement.

PARTIAL INVALIDITY

  1. If at any time any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall in any way be affected or impaired thereby.

EFFECTIVE DATE

  1. This Agreement shall take effect as of the date and year first above written.

PROPER LAW

  1. This Agreement shall be governed by the laws of the Province of Ontario and the federal laws of Canada applicable therein.

EXISTING AGREEMENTS

  1. This Agreement supersedes and replaces that (those) Deposit Agreement(s) made as of the Line to fill out____ day of Line to fill out__________________ , Line to fill out_____ .

MISCELLANEOUS

  1. Paragraph headings and other headings or captions or the index or the title hereto shall not be used in construing or interpreting any provision of this Agreement or the relationship of the parties to this Agreement.

    IN WITNESS WHEREOF the Authorized Foreign Bank, the Depository and the Superintendent have executed this Agreement as of the date and year first above written.

    • (Authorized Foreign Bank)

    • Name and Title

    • Name and Title

    • (Depository)

    • Name and Title

    • Name and Title

    • Superintendent of Financial Institutions

SCHEDULE "A" to the Deposit Agreement made the Line to fill out____ day of Line to fill out__________________, between Line to fill out____________________, Line to fill out____________________________ and the Superintendent of Financial Institutions

VESTING OF ASSETS PAYABLE IN CANADIAN DOLLARS

  1. Cash

  2. Securities issued or guaranteed by:

    1. Canada

    2. a Canadian Province

    3. a Canadian municipal or school corporation

  3. Bankers' Acceptances accepted by:

    1. a bank (other than an affiliated of the authorized foreign bank) listed in Schedules I or II of the Bank Act, or

    2. another authorized foreign bank (other than an affiliate) listed in Schedule III of the Bank Act.

SCHEDULE "B" to the Deposit Agreement made the ____ day of Line to fill out__________________, between Line to fill out____________________, Line to fill out____________________________ and the Superintendent of Financial Institutions.

WHEREAS Line to fill out____________________________________, a Canadian Financial Institution incorporated under the laws of Line to fill out__________________, has been appointed by certain Deposit Agreements the Depository for the authorized foreign banks referred to in the attached Schedule (hereinafter called the "Authorized Foreign Banks") for the purposes and under the provisions of the Bank Act.

NOW THEREFORE IT IS WITNESSED that the said Canadian Financial Institution, as such Depository, hereby acknowledges and declares that it now holds for the Authorized Foreign Banks assets the total values of which, as at Line to fill out__________________, Line to fill out_____, based on the values as last determined on the basis prescribed by the Act, are summarized in the attached Schedule and details in respect of which are set forth in the diskette accompanying this Declaration, being property of the Authorized Foreign Banks in accordance with the terms and provisions of the said Deposit Agreements, and that the said Depository declares that it will continue to hold said assets under and subject to all the terms and provisions of the said Depository Agreements.

DATED at the City of Line to fill out____________________ this Line to fill out____ day of Line to fill out__________________, Line to fill out____.

CANADIAN FINANCIAL INSTITUTION

Authorized Foreign Bank Institutions Code Full Authorized Foreign Bank Name Value

SCHEDULE "C" to the Deposit Agreement made the Line to fill out____ day of __________________, between Line to fill out____________________, Line to fill out____________________________ and the Superintendent of Financial Institutions.

WHEREAS Line to fill out____________________________________, a Canadian Financial Institution under the laws of Line to fill out__________________, has been appointed by a certain Deposit Agreement dated as of the Line to fill out____ day of Line to fill out__________________, Line to fill out____, the Depository for Line to fill out__________________ (hereinafter called the "Authorized Foreign Bank") for the purposes and under the provisions of the Bank Act.

NOW THEREFORE IT IS WITNESSED that the said Canadian Financial Institution, as such Depository, hereby acknowledges and declares that it now holds for the Authorized Foreign Bank under said Deposit Agreement assets the total value of which, based on the value as last determined on the basis prescribed by the Act, is summarized in the attached Schedule and details in respect of which are set forth in the diskette accompanying this Declaration, being property of the Authorized Foreign Bank in accordance with the terms and provisions of the said Deposit Agreement, and that the said Depository declares that it will continue to hold said assets under and subject to all the terms and provisions of the said Deposit Agreement.

DATED at the City of Line to fill out____________________ this Line to fill out____ day of Line to fill out__________________, Line to fill out____.

CANADIAN FINANCIAL INSTITUTION

Appendix II

Asset Withdrawal Request Form and Declaration

To the Superintendent of Financial Institutions:

We (name of foreign bank branch) hereby request approval to withdraw the following securities from the depository account with Line to fill out____________________ (name of depository).

Securities Book value Market value
Total amount of withdrawal
CED Calculation as of prior month end
Total value of deposit account
Amount of total liabilitiesFootnote 1

It is hereby certified that the aggregate of securities and/or funds remaining on deposit pursuant to the Standard Deposit Agreement after this withdrawal amounts to $ Line to fill out________, valued at the lower of principal amount or market. The amount required to be maintained on deposit pursuant to subparagraph 582(1)(b)(i) of the Bank Act is $ Line to fill out________ as of this date.

Dated at the City of Line to fill out__________ this Line to fill out____ day of Line to fill out__________, Line to fill out______.

Line to fill out__________________________________

Name and Title of Officer

Appendix III

ABC Foreign Bank Branch as at XX/XX/200X

Capital Equivalency Report
in thousands of dollars As at quarter-end Average for the quarter
  1. Capital Equivalency Deposit

    Qualifying Assets (lower of book value or market value)

    1. Pre-approved asset classes
      1. Cash
      2. Securities issued or guaranteed by Canada
      3. Securities issued or guaranteed by a Canadian province
      4. Securities issued or guaranteed by a Canadian municipal or school corporation
    2. Assets approved by the Superintendent

      1. Deposits with regulated financial institutions
      2. Securities
      3. Other assets
Total Capital Equivalency Deposit A
  1. On- and off-balance sheet liabilities
    1. Total on-balance sheet liabilities
    2. Less:
      1. Accrued expenses
      2. Due to Head Office
    3. Add: off-balance sheet itemsFootnote 2
      1. Direct credit substitutes (Credit conversion: 100%)
      2. Sale & repurchase agreements (Credit conversion: 100%)
      3. Transaction-related contingents (Credit conversion: 50%)
      4. Short-term self-liquidating trade-related contingents (Credit conversion: 20%)
Total on- & off-balance sheet liabilities B
  1. Capital Equivalency Ratio

    Capital equivalency deposit as a % of total on- and off-bal.sheet liab. (A / B × 100)

Footnotes

Footnote 1

As defined by OSFI. (See Appendix III)

Return to footnote 1 referrer

Footnote 2

Credit equivalent amounts must be reported for these items. Credit equivalent amounts are calculated by multiplying the notional principal amounts by the indicated credit conversion factors.

Return to footnote 2 referrer