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.
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