Office of the Superintendent of Financial Institutions
On March 27, 2020,
OSFI announced that in situations where a federally regulated deposit-taking institution (DTI) grants a borrower a payment deferral, these loans will continue to be treated as performing loans under the Capital Adequacy Requirements (CAR) Guideline for the duration of the deferral up to a maximum of 6 months. It was also communicated that OSFI would revisit the special capital treatment in the future, as needed.
OSFI continues to monitor the evolving situation with COVID-19, and has been in frequent contact with institutions to assess their operational capacity and management of the current economic challenges. As a result, today OSFI is announcing the following updates to the special capital treatment of loans subject to payment deferrals:
This change supports the accurate measurement of DTIs’ capital needs and the long-term integrity of OSFI’s capital framework. While the special capital treatment and regulatory flexibility related to payment deferrals was warranted at the onset of COVID-19, as both lenders and borrowers adapted to the extraordinary circumstances and unprecedented disruptions related to the pandemic, banks are now in a better position to employ their business-as-usual alternatives to support troubled borrowers. As such, the special capital treatment for loans with payment deferrals is no longer warranted and is being phased out through the changes being announced.
OSFI continues to monitor the impacts of COVID-19 on banks and is prepared to adjust its guidance and temporary measures if necessary.
Further clarifications can be found in our
updated FAQs for Federally Regulated Deposit-Taking Institutions.