Total Loss Absorbing Capacity (TLAC) Guideline

OSFI is issuing the final version of the Total Loss-Absorbing Capacity guideline (TLAC), which sets out the framework within which the Superintendent will assess whether a domestic systemically important bank (D-SIB) maintains its minimum capacity to absorb losses pursuant to subsection 485(1.1) of the Bank Act, upon its coming into force. D-SIBs are expected to meet their TLAC requirements on or before November 1, 2021.

The purpose of the TLAC requirement is to provide a non-viable D-SIB with sufficient loss-absorbing capacity to support its recapitalization. This would facilitate an orderly resolution of the D-SIB while minimizing adverse impacts on the stability of the financial sector, ensuring the continuity of critical functions, and minimizing taxpayers’ exposure to loss.