Canada: Capital treatment of federal programs to support COVID-19 efforts

BC Ross Garden - Image by ArtTower from Pixabay

The Office of the Superintendent of Financial Institutions (OSFI) has directed on how deposit-taking institutions (DTIs) should treat new capital they make available to small and medium-sized enterprises through recently announced government programs.

The capital treatment for each program is as follows:

i) Canada Emergency Business Account: DTIs taking on these loans can exclude them from their risk-based capital and leverage ratios.

ii) New Export Development Canada loan guarantee for small and medium enterprises:  DTIs taking on these loans would treat the portion of the loan backed by the Government as a sovereign exposure, with the remaining portion treated as a loan to the borrower. 

iii) New Business Development Bank of Canada co-lending program for small and medium enterprises: DTIs taking on these loans would need to account for the portion of the loan that they hold in their risk-based capital and leverage ratios.

Photo Credit: Pixabay

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s