OSFI measures to help banks, insurers, pension plans through crisis

By James Langton | March 27, 2020 | Last updated on March 27, 2020
2 min read
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Federal financial regulators are taking measures designed to give banks, insurers and pension plans more flexibility to deal with the effects of the Covid-19 outbreak.

The Office of the Superintendent of Financial Institutions (OSFI) said it’s adjusting a variety of capital, liquidity and reporting requirements on federally regulated financial institutions in an effort to help reduce operational stress.

In the banking sector, OSFI said that loans subject to payment deferrals due to the outbreak will be treated as still-performing loans for regulatory capital purposes.

The regulator also said it’s tweaking banks’ capital and liquidity requirements so they’re suited for these “unprecedented circumstances.”

These adjustments include raising the balance sheet limit on covered bonds, easing liquidity requirements, and encouraging banks to use their leverage and liquidity buffers to provide flexibility against heightened stress.

OSFI said these steps are all being introduced to provide “further flexibility in addressing current conditions while promoting financial resilience and stability.”

“Over the coming weeks, OSFI will provide additional details on the implementation and disclosure issues associated with these changes,” it said.

The regulator also announced that it’s delaying the implementation of new capital and liquidity requirements for smaller banks to 2023.

Earlier on Friday, global banking regulators pushed back the implementation of certain Basel III capital and liquidity requirements by a year. OSFI indicated that it is adopting that approach too.

For insurers, OSFI said that payment deferrals “will not cause insured mortgages to be treated as delinquent or in arrears.”

It also suspended the requirement to provide progress reports on the implementation of new accounting standards.

Finally, for private pension plans, OSFI is “temporarily freezing portability transfers and annuity purchases to protect the benefits of plan members and beneficiaries,” while also extending certain filing deadlines.

“The regulatory changes we are announcing today will ensure that our capital and liquidity requirements are fit for purpose in today’s extraordinary conditions,” said Jeremy Rudin, superintendent at OSFI, in a statement.

“We are also acting to alleviate some of the pressure on federally regulated banks, insurers and private pension plans so that they can focus their efforts on the most critical operational areas during the current disruption.”

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.