Canada’s federal banking regulator is ending restrictions it implemented last year to help the country's commercial banks survive during the global pandemic.
The Office of the Superintendent of Financial Institutions (OSFI) says now that financial markets have stabilized and COVID-19 vaccines are being rolled out worldwide, the rules regarding market risk capital requirements will be returned to what they were before the pandemic.
Last year, OSFI made temporary regulatory adjustments to help banks in terms of their capital, liquidity and reporting requirements. The changes included a reduction in the stressed value at risk (SVaR) multiplier which is used to help assess the capital adequacy of a financial institution.
The reduction was meant to help give banks flexibility in addressing stressed conditions triggered by the pandemic. OSFI says that, as of May 1, federally regulated deposit-taking institutions that are subject to market risk requirements should restore their risk multipliers to the levels that were in place in early 2020 before the COVID-19 pandemic.
