Office of the Superintendent of Financial Institutions
This guidelineFootnote 2 sets out the capital disclosure requirements for Canadian banks, bank holding companies, federally regulated trust and loan companies, and cooperative retail associations Footnote 3 (collectively institutions). It implements the Composition of Capital (CC1), Reconciliation of Regulatory Capital to Balance Sheet template (CC2) and Main Features (CCA) templates that were:
The consequential amendments to this guideline reflect the disclosure of TLAC holdings and the removal of previous transitional guidance that is no longer applicable as of January 1, 2018.
The capital disclosure requirements outlined in this guideline apply to all institutions that implement the Basel III framework.
Part 4 of this guideline sets out disclosure requirements for Canadian Domestic Systemically Important BanksFootnote 7 (D-SIBs).
Part 5 of this guideline sets out disclosure requirements for non-D-SIBs.
The limited exemption from disclosures applies to institutions that meet the exemption criteria outlined in OSFI's April 2017 Pillar 3 Disclosure RequirementsFootnote 8 guideline.
OSFI requires all institutions to implement the revised disclosures commencing with the quarterly reporting period ending January 31, 2019.
The Composition of Capital templates should be disclosed on a quarterly basis. The Main Features Template should be disclosed, at a minimum, on a quarterly basis to reflect issuances or repayments of capital instruments or other TLAC-eligible instruments, redemptions, conversions/write downs or other material changes in the nature of existing instruments.
Where an institution provides Pillar 3 disclosures only on an annual basis, the frequency of disclosures within this guideline can be made on an annual basis.
Disclosures should be easily located by users. Institutions should make all Pillar 3 disclosures available on their websites to facilitate public access. D-SIBs may choose where to provide the disclosures in their financial reports (e.g. management discussion and analysis, financial statement notes, supplemental information or standalone Pillar 3 report).
Institutions are required to maintain a "Regulatory Disclosures" section of their public websites, where all of the information relating to disclosure of regulatory capital and TLAC (if applicable) is made available.
Institutions are required to ensure public access to previously issued Pillar 3 disclosures for a minimum of 12 months. Where institutions make investor information available for longer periods, the same archive period should also be used for Pillar 3 disclosures. There is no requirement to include details of redeemed securities on the Main Features Template.
The disclosure requirements for D-SIBs are summarized belowFootnote 9:
Composition of Capital Template (CC1). This template reports the breakdown of an institution's regulatory capital with the aim of disclosing all regulatory adjustments or deductions to enhance transparency and ensure comparability. Rows 26, 41 and 56 of this template provide for "National specific regulatory adjustments" in the calculations of "Total regulatory adjustments to CET1" (i.e., row 28), "Total regulatory adjustments to Additional Tier 1" (i.e., row 43), and "Total regulatory adjustments to Tier 2 capital" (i.e., row 57). OSFI has modified rows to reflect Canadian specific adjustments and to include TLAC holdings in Annex 1 Composition of Capital Template:
Row 26: Other deductions and regulatory adjustments to CET1 as specified by OSFI. This is currently an empty set but is included as a placeholder for future use.
Row 41: Other deductions from Tier 1 capital as specified by OSFI. This includes deductions related to reverse mortgages (Row 41a) as specified in the CAR Guideline.
Row 56: Other deductions from Tier 2 capital as specified by OSFI. This is currently an empty set but is included as a placeholder for future use.
Rows 53, 54, 54a and 55: Deductions from Tier 2 capital for TLAC holdings.
Balance SheetFootnote 10 Reconciliation Requirements (CC2). This template sets out a 3-step approach to achieve a full reconciliation of all regulatory elements back to the institution's audited balance sheet. This requirement aims to address a disconnect that exists between the numbers used for the calculation of regulatory capital and the numbers used in the published financial statements. As the BCBS requirements permit a flexible template, institutions are to complete the 3-step process using their own balance sheet which may have different items. For illustrative purposes, an example of the reconciliation has been included in Annex 2.
List of legal entities: Institutions are required to disclose a list of legal entities that are included within the accounting scope of consolidation but excluded from the regulatory scope of consolidation. Similarly, institutions are required to list the legal entities included in the regulatory consolidation that are not included in the accounting scope of consolidation. Further, if some entities are included in both the regulatory scope of consolidation and accounting scope of consolidation, but the method of consolidation differs between these two scopes, institutions are required to list these legal entities separately and explain the differences in the consolidation methods. For each legal entity that is required to be disclosed, an institution must also disclose its total balance sheet assets and total balance sheet equity and a description of the entity's principle activities.
Main Features Template (CCA). Institutions are required to disclose the Main Features Template in Annex 3, which requires disclosure of the main features of outstanding regulatory capital and, if applicable, other TLAC-eligible instruments.
Institutions are required to report each regulatory capital instrument, including common shares and other TLAC-eligible instruments, in a separate column of the template, such that the completed template would provide a 'main features report' that summarises all of the regulatory capital instruments and TLAC-eligible instruments of the group. D-SIBs disclosing these instruments should group them under three sections (horizontally along the table) to indicate whether they are for meeting (i) only capital (but not TLAC) requirements; (ii) both capital and TLAC requirements; or (iii) only TLAC (but not capital) requirements.
Non-D-SIBs are required to disclose a modified version of the Composition of Capital Template in Annex 4.
Key points to note about the template set out in this Annex areFootnote 11:
Directly issued qualifying common share capital (and equivalent for non-joint stock companies) plus related stock surplus
of which: significant investments in the common stock of financials
of which: mortgage servicing rights
of which: deferred tax assets arising from temporary differences
of which: classified as equity under applicable accounting standards
of which: classified as liabilities under applicable accounting standards
of which: instruments issued by subsidiaries subject to phase out
of which: capital conservation buffer
of which: G-SIB buffer
of which: DSIB buffer
Note: From Q3 2014 to Q4 2018, institutions phasing in the CVA capital charge using Option 1 as per OSFI's Capital Adequacy Requirements Guideline will be required to disclose rows 60a, 60b, and 60c, instead of row 60.
The following table sets out an explanation of each row of the template with relevant references to OSFI's CAR Guideline. Institutions are required to report deductions from capital as negative numbers and additions to capital as positive numbers. For example, goodwill (row 8) should be reported as a negative number, as should gains due to the change in own credit risk of the institution (row 14). However, losses due to the change in own credit risk of the institution should be reported as a positive numbers as these are added back in the calculation of Common Equity Tier 1.
Under Step 1 institutions are required to take their balance sheet in their published financial statements (numbers reported the middle column below, in a balance sheet that is provided for illustrative purposes) and report the numbers when the regulatory scope of consolidation is applied (numbers reported in the right hand column below of the illustrative balance sheet). If there are rows in the balance sheet under the regulatory scope of consolidation that are not present in the published financial statements, institutions are required to add these and give a value of zero in the middle column.
Assets of discontinued operations
Liabilities of discontinued operations
Under Step 2 institutions are required to expand the balance sheet under the regulatory scope of consolidation (revealed in Step 1) to identify all the elements that are used in the definition of capital disclosure template set out in Annex 1. The more complex the balance sheet of the institution, the more items will need to be disclosed. Each element must be given a reference number/letter that can be used in Step 3.
Under Step 3 institutions are required to complete a column added to Composition of Capital Template (CC1) to show the source of every input.
of which: Reverse mortgages
Set out below is the template that institutions must use to ensure that the key features of all regulatory capital and other TLAC-eligible instruments are disclosed. Institutions should disclose the row numbers as indicated below to ensure market participants can easily compare banks both domestically and internationally. Where the cell is not applicable, institutions should report "NA" and maintain the row numbering of this template to ensure comparability.
To facilitate completion, an Excel spreadsheet of this template is available on OSFI's website.
Using the reference numbers in the left column of the table above, the following table provides a more detailed explanation of what institutions are required to report in each of the grey cells, including, where relevant, the list of options contained in the spreadsheet's drop down menu.
Identifies issuer legal entity.
Unique identifier (e.g. CUSIP, ISIN or Bloomberg identifier for private placement)
Specifies the governing law(s) of the instrument
Other TLAC-eligible instruments governed by foreign law (i.e. a law other than that of the home jurisdiction of a resolution entity) include a clause in the contractual provisions whereby investors expressly submit to, and provide consent to the application of, the use of resolution tools in relation to the instrument by the home authority notwithstanding any provision of foreign law to the contrary, unless there is equivalent binding statutory provision for cross-border recognition of resolution actions. Select "NA" where the governing law of the instrument is the same as that of the country of incorporation of the resolution entity.
Select from menu: [Contractual]
Specifies the regulatory capital treatment during the Basel III transitional Basel III phase (i.e. the component of capital
that the instrument is being phased-out from).
Select from menu: [Common Equity Tier 1] [Additional Tier 1] [Tier 2]
Specifies regulatory capital treatment under Basel III rules not taking into account transitional treatment.
Select from menu: [Common Equity Tier 1] [Additional Tier 1] [Tier 2] [Ineligible]
Specifies the level(s) within the group at which the instrument is included in capital.
Select from menu: [Solo] [Group] [Solo and Group]
Specifies instrument type, varying by jurisdiction. Helps provide more granular understanding of features, particularly
Select from menu: [Common shares] [Preferred shares] [Innovative Tier 1] [Other Additional Tier 1] [Tier 2 subordinated debt] [Tier 2B Trust Subordinated Note] [Other Tier 2]
Specifies amount recognised in regulatory capital.
Par value of instrument
Specifies accounting classification. Helps to assess loss absorbency.
Select from menu: [Shareholders' equity] [Liability – amortised cost] [Liability – fair value option] [Non-controlling interest
in consolidated subsidiary]
Specifies date of issuance.
Specifies whether dated or perpetual.
Select from menu: [Perpetual] [Dated]
For dated instrument, specifies original maturity date (day, month and year). For perpetual instrument put "no maturity".
Specifies whether there is an issuer call option. Helps to assess permanence.
Select from menu: [Yes] [No]
For instrument with issuer call option, specifies first date of call if the instrument has a call option on a specific date
(day, month and year) and, in addition, specifies if the instrument has a tax and/or regulatory event call. Also specifies
the redemption price. Helps to assess permanence.
Specifies the existence and frequency of subsequent call dates, if applicable. Helps to assess permanence.
Specifies whether the coupon/dividend is fixed over the life of the instrument, floating over the life of the instrument,
currently fixed but will move to a floating rate in the future, currently floating but will move to a fixed rate in the future.
Select from menu: [Fixed] [Floating] [Fixed to floating] [Floating to fixed]
Specifies the coupon rate of the instrument and any related index that the coupon/dividend rate references.
Specifies whether the non payment of a coupon or dividend on the instrument prohibits the payment of dividends on
common shares (i.e. whether there is a dividend stopper).
Select from menu: [yes] [no]
Specifies whether the issuer has full discretion, partial discretion or no discretion over whether a coupon/dividend is
paid. If the institution has full discretion to cancel coupon/dividend payments under all circumstances it must select "fully
discretionary" (including when there is a dividend stopper that does not have the effect of preventing the institution from
cancelling payments on the instrument). If there are conditions that must be met before payment can be cancelled (e.g.
capital below a certain threshold), the institution must select "partially discretionary". If the institution is unable to cancel
the payment outside of insolvency the institution must select "mandatory".
Select from menu: [Fully discretionary] [Partially discretionary] [Mandatory]
Specifies whether there is a step-up or other incentive to redeem.
Specifies whether dividends / coupons are cumulative or noncumulative.
Select from menu: [Noncumulative] [Cumulative]
Specifies whether instrument is convertible or not. Helps to assess loss absorbency.
Select from menu: [Convertible] [Nonconvertible]
Specifies the conditions under which the instrument will convert, including point of non-viability. Where one or more authorities have the ability to trigger conversion, the authorities should be listed. For each of the authorities it should be stated whether it is the terms of the contract of the instrument that provide the legal basis for the authority to trigger conversion (a contractual approach) or whether the legal basis is provided by statutory means (a statutory approach).
For conversion trigger separately, specifies whether the instrument will: (i) always convert fully; (ii) may convert fully or partially; or (iii) will always convert partially
Free text referencing one of the options above
Specifies rate of conversion into the more loss absorbent instrument. Helps to assess the degree of loss absorbency.
For convertible instruments, specifies whether conversion is mandatory or optional. Helps to assess loss absorbency.
Select from menu: [Mandatory] [Optional] [NA]
For convertible instruments, specifies instrument type convertible into. Helps to assess loss absorbency.
Select from menu: [Common Equity Tier 1] [Additional Tier 1] [Tier 2] [Other]
If convertible, specify issuer of instrument into which it converts.
Specifies whether there is a write down feature. Helps to assess loss absorbency.
Select from menu: [Yes] [No]
Specifies the trigger at which write-down occurs, including point of non-viability. Where one or more authorities have the ability to trigger write-down, the authorities should be listed. For each of the authorities it should be stated whether it is the terms of the contract of the instrument that provide the legal basis for the authority to trigger write-down (a contractual approach) or whether the legal basis is provided by statutory means (a statutory approach).
For each write-down trigger separately, specifies whether the instrument will: (i) always be written down fully: (ii) may be written down partially; or (iii) will always be written down partially. Helps assess the level of loss absorbency at write-down.
For write down instrument, specifies whether write down is permanent or temporary. Helps to assess loss absorbency.
Select from menu: [Permanent] [Temporary] [NA]
For instrument that has a temporary write-down, description of write-up mechanism.
Type of subordination.
Specifies instrument to which it is most immediately subordinate. Helps to assess loss absorbency on gone-concern basis. Where applicable, institutions should specify the column numbers of the instruments in the completed main features template to which the instrument is most immediately subordinate.
Specifies whether there are non-compliant features.
If there are non-compliant features, asks institution to specify which ones. Helps to assess instrument loss absorbency.
Institutions should disclose the row numbers as indicated below to ensure that market participants can easily compare institutions. Where the cell is not applicable, institutions can either insert "NA" or not show the line item but maintain the row numbering of this template. The explanatory table in Annex 1 provides a description of each line item.
Note: From Q3 2014 to Q4 2018, institutions phasing in the CVA capital charge using Option #1 as per OSFI's CAR GuidelineFootnote 12 will be required to disclose rows 60a, 60b, and 60c, instead of row 60.
For institutions with a fiscal year ending October 31 or December 31, respectively.
Return to footnote 1 referrer
Formerly the advisory entitled Public Capital Disclosure Requirements related to Basel III Pillar 3, last revised in April 2014.
Return to footnote 2 referrer
Banks and bank holding companies, to which the Bank Act applies; federally regulated trust or loan companies, to which the Trust and Loan Companies Act applies; and cooperative retail associations, to which the Cooperative Credit Associations Act applies.
Return to footnote 3 referrer
BCBS June 2012: Composition of capital disclosure requirements – Rules text
http://www.bis.org/publ/bcbs221.htm. The publication sets out a framework to ensure that the components of a bank's capital base is publicly disclosed in standardised formats across and within jurisdictions for banks.
Return to footnote 4 referrer
BCBS March 2017: https://www.bis.org/bcbs/publ/d400.htm
Return to footnote 5 referrer
As set out in Chapter 2 of OSFI's Capital Adequacy Requirements guideline, TLAC holdings refers to holdings of instruments, other than regulatory capital instruments, issued by G-SIBs and Canadian D-SIBs.
Return to footnote 6 referrer
Chapter 1 of the Capital Adequacy Requirements (CAR) Guideline identifies D-SIBs. http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/CAR18_chpt1.aspx#1.11. Non-D-SIBs consist of all other federally regulated deposit-taking institutions that are not D-SIBs.
Return to footnote 7 referrer
Pillar 3 Disclosure Requirements, April 2017: http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/plr3.aspx
Return to footnote 8 referrer
BCBS March 2017: https://www.bis.org/bcbs/publ/d400.htm, Section 1.1 and Section 3.1 provides extensive discussion regarding these disclosures and should be read in conjunction with this Guideline.
Return to footnote 9 referrer
Also referred to as "statement of financial position."
Return to footnote 10 referrer
BCBS June 26, 2012: Composition of capital disclosure requirements – Rules text http://www.bis.org/publ/bcbs221.htm, paragraph 39.
Return to footnote 11 referrer
CAR guideline, chapter 1, section 1.10 - http://www.osfi-bsif.gc.ca/Eng/fi-if/rg-ro/gdn-ort/gl-ld/Pages/CAR_chpt1.aspx
Return to footnote 12 referrer