OSFI releases final guideline on total loss absorbing capacity for Canada’s domestic systemically important banks

News Release

For Immediate Release

OTTAWA ─ April 18, 2018 ─ Office of the Superintendent of Financial Institutions

Today the Office of the Superintendent of Financial Institutions (OSFI) released its final Total Loss Absorbing Capacity (TLAC) guideline for Canada’s domestic systemically important banks (D-SIBs).

TLAC requirements are designed to ensure a D-SIB has sufficient loss absorbing capacity to support its recapitalization in the unlikely event of a failure. This additional loss absorbing capacity would facilitate an orderly resolution of a bank and allow it to remain open and operating without requiring public funds, or threatening financial stability.

Under the Bank Act, OSFI is responsible for setting, monitoring and enforcing TLAC requirements for Canadian D-SIBs. The requirements come into effect on September 23, 2018 and D-SIBs will have until November 1, 2021 to meet them.

Quote

“Together with the Capital Adequacy Requirements (CAR) guideline and the Leverage Requirements guideline, the TLAC guideline provides a robust capital framework to ensure Canada’s largest banks remain well-capitalized at all times, including in stressed conditions,” said Carolyn Rogers, Assistant Superintendent, Regulation Sector.

Quick Facts

  • OSFI’s TLAC guideline forms part of the Government of Canada’s Bank Recapitalization Regime.
  • The TLAC guideline is consistent with the Financial Stability Board’s TLAC standard for global systemically important banks and is tailored to the Canadian context.
  • The Capital Adequacy Requirements (CAR) guideline has been revised to incorporate investments in TLAC instruments by banks. These revisions will be effective as of the first fiscal quarter of 2019.
  • Public disclosure of D-SIBs’ TLAC ratios will begin the fiscal quarter starting on November 1, 2018.

Associated Links

TLAC Requirement

CAR Revisions

TLAC Disclosure

About OSFI

The Office of the Superintendent of Financial Institutions (OSFI) is an independent agency of the Government of Canada, established in 1987, to protect depositors, policyholders, financial institution creditors and pension plan members, while allowing financial institutions to compete and take reasonable risks.

Media Contact

Annik Faucher
OSFI −Public Affairs
annik.faucher@osfi-bsif.gc.ca
613-949-8401