Big Six banks are now officially "systemically important"

by Steve Randall22 Aug 2018

Canada’s Big Six banks are now officially designated as D-SIBs, domestic systemic important banks.

OSFI announced Tuesday that the designation was now in place as required by an amendment of the Bank Act on June 21, 2016. OSFI has considered the banks D-SIBS since March 2013.

The six banks are Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank.

RBC was designated as systemically important to the global financial system recently and this new designation does not affect that.

The Bank Act amendment implements the statutory Bail-in Regime and OSFI’s Total Loss Absorbing Capacity (TLAC) guideline for the banks.

“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,” Carolyn Rogers, Assistant Superintendent, Regulation Sector explained earlier this year.

Under the rules, OSFI also sets the D-SIBs’ minimum TLAC. Accordingly, the Superintendent has issued orders to each D-SIB, setting the minimum risk-based TLAC ratio at 21.5% of risk-weighted assets and the minimum TLAC leverage ratio at 6.75%.


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