Canada Gazette, Part I, Volume 159, Number 3: Canada Deposit Insurance Corporation Differential Premiums By-law

Please be advised that the consultation period for this proposed regulation is now closed. Submitted comments will be posted once they have been reviewed. If you have concerns, please contact us using our Contact the Canada Gazette Directorate page.

January 18, 2025

Statutory authority
Canada Deposit Insurance Corporation Act

Sponsoring agency
Canada Deposit Insurance Corporation

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the By-law.)

General Comment

Issues

The Canada Deposit Insurance Corporation Differential Premiums By-law (By-law) establishes a differential premiums system (DPS) that classifies member institutions into different categories, sets out the criteria, factors or procedures the Canada Deposit Insurance Corporation (CDIC) will consider or follow in determining the category in which a member institution is classified, and sets the amount of, or provides a manner of determining the amount of, the annual premium applicable to each category.

In addition to an annual review of the By-law to confirm that it is technically up-to-date, CDIC performs strategic reviews of the DPS on a regular basis to ensure that the system remains responsive to developments in the member institution operating environment and supports the achievement of CDIC’s objects under section 7 of the Canada Deposit Insurance Corporation Act (CDIC Act).

Following the most recent strategic review in 2021–2023, CDIC’s Board of Directors concluded that the following key changes are required to the DPS:

Background

CDIC’s mission is to protect depositors. It provides deposit insurance, resolves its member institutions in the event they fail, and promotes and contributes to financial stability.

Insurance losses arising from the failure of a member institution are ultimately borne by the membership through the assessment and collection of premiums. These premiums are assessed based on the financial and resolution-related risks posed by member institutions to CDIC.

Under the current By-law, member institutions are classified into premium categories based on a score out of 100 points, which consists of a qualitative score (a maximum of 40 points) and a quantitative score (a maximum of 60 points). A member institution’s annual premium is determined by a formula that takes into account the premium rate corresponding to the member institution’s premium category and the member institution’s volume of insured deposits.

Most recently, amendments have been proposed to the By-law to increase the number of premium categories from four to five categories. This change would take effect on April 1, 2025.

Objective

The proposed Canada Deposit Insurance Corporation Differential Premiums By-law (proposed By-law) would repeal and replace the current By-law and strengthen the risk sensitivity of the DPS while modernizing its framework.

Description

In addition to classification based on five premium categories, the proposed By-law sets out requirements for the classification of new member institutions, establishes a semi-annual classification framework, and provides for revised criteria in respect of quantitative and qualitative scoring among other changes.

New member institutions

The proposed By-law makes changes to the classification of new member institutions to better reflect their risk profile while ensuring fairness with regard to the existing membership.

New member institutions are institutions that have been operating as members for less than two full premium years. The proposed By-law would require new member institutions to be classified in Premium Category 2, subject to certain exceptions. The classification in Premium Category 2 is due to the fact that a new member institution has an unproven track record as a CDIC member against its status as a federally regulated, deposit-taking institution.

If the Office of the Superintendent of Financial Institutions (OSFI) assigns a stage of intervention to a new member institution, the proposed By-law would require that institution to be classified in Premium Category 3. A change in classification from Premium Category 2 to Premium Category 3 represents an increased risk to CDIC.

The proposed By-law includes transitional provisions that would allow member institutions that became new member institutions before the proposed By-law comes into force to be grandfathered in Premium Category 1 until they are no longer considered to be new. If OSFI assigns that institution a stage of intervention, the new member institution must be classified in Premium Category 3 for purposes of determining its annual premium.

Semi-annual classification

The proposed By-law would increase the frequency of CDIC’s classification of each member institution from an annual classification to a semi-annual classification. This change would ensure that intra-year changes in a member institution’s risk profile are appropriately captured and that they incentivize member institutions to promptly address any identified issues.

Under the proposed By-law, each member institution would be classified into a premium category as of January 15 of each year, based on information available in the fall of the previous year, and as of July 15 of each year, based on information available in the spring of the same year. CDIC would be required to notify member institutions of their classification by January 15 and July 15.

For each classification, CDIC must determine the sum of the member institution’s quantitative and qualitative scores.

Quantitative scores

For purposes of the January 15 classification, the member institution’s quantitative score would be determined based on information in a fall return that must be submitted to CDIC by October 31 of each year. The fall return must be completed based on information as of the end of the institution’s second quarter of their current financial year.

For purposes of the July 15 classification, the quantitative score would be determined based on information in a spring return that must be submitted to CDIC by April 30 of each year. The spring return must be completed based on information as of the end of the institution’s most recent financial year.

In circumstances where a member institution does not have the requisite financial data or information, the proposed By-law provides for an alternative manner of assigning a quantitative score.

Qualitative scores

For both the January 15 and July 15 classifications, the qualitative score would be determined by an examiner’s rating, which is assigned by the Superintendent of Financial Institutions, and a new Risk and Resolvability Score (RRS) that would be assigned by CDIC. The RRS would replace the CDIC component of the qualitative criteria under section 30 of the current By-law.

The examiner’s rating and the RRS are described below.

Assessing the annual premium

Under the proposed By-law, for each classification, CDIC must determine the sum of the quantitative and qualitative scores described above to classify the member institution into one of the five premium categories and, in accordance with the table under Schedule 1 of the proposed By-law, assign to that member institution a corresponding premium rate.

Next, CDIC must determine the average of the member institution’s two premium rates, based on its January 15 and July 15 classifications, and apply the following formula to assess the member institution’s annual premium:

A × B × (C + D) ÷ 2,
where
A
is 1/3 of 1% of the member institution’s volume of insured deposits;
B
is the volume of insured deposits as of April 30 in the immediately preceding premium year;
C
is the premium rate that corresponds to the member institution’s premium category as of its January 15 classification; and
D
is the premium rate that corresponds to the member institution’s premium category as of its July 15 classification.
Late returns

If the fall return or the spring return is not submitted on time, the proposed By-law would require the member institution’s annual premium to be determined based on the premium rate for Premium Category 5 for all of the days that CDIC is not in receipt of the relevant return.

Revised returns

If a member institution becomes aware of an error or omission in a fall return or a spring return, or if it makes a change to other financial documents that are required to be submitted to CDIC, the proposed By-law would require the member institution to submit either a revised return or a declaration identifying the error, omission or change and indicating that no modifications are required to the relevant return. A revised return or a declaration must be submitted to CDIC by no later than July 2.

First semi-annual classification

The proposed By-law would come into force on April 29, 2026. Accordingly, the first fall return must be submitted to CDIC by October 31, 2026. The first annual premium determined under the new semi-annual classification framework would be for the premium year that begins on May 1, 2027.

Forms and instructions for the fall and spring returns

The forms for the fall return and spring return will be published in the Differential Premiums Manual (Manual) on CDIC’s website. CDIC will update the Manual ahead of the first fall return submission deadline of October 31, 2026. The updated Manual will provide detailed instructions on completing the returns and submitting them to CDIC through the Regulatory Reporting System.

Scorecard changes

Quantitative criteria

To strengthen risk differentiation among member institutions, the proposed By-law would make a number of changes to the quantitative criteria and their corresponding scoring thresholds. These changes include

Qualitative criteria

The proposed By-law would make changes to the examiner’s rating and replace the CDIC component under section 30 of the current By-law with the RRS.

The five-point scale of the examiner’s rating would be replaced by an eight-point scale with an associated maximum of 25 points instead of 35 points. This change is consistent with OSFI’s Supervisory Framework, which provides for Overall Risk Ratings based on an eight-point scale.

The maximum of 5 points associated with the CDIC component would be replaced by a maximum of 15 points that could be assigned by CDIC for the RRS. The RRS takes the following into consideration: CDIC’s internal risk assessment of member institutions; compliance with sections 2 to 4 of the Canada Deposit Insurance Corporation Data and System Requirements By-law, and in the case of a D-SIB, the compliance of their resolution plan with the Canada Deposit Insurance Corporation Resolution Planning By-law.

Regulatory development

Consultation

In July 2022, CDIC held a 90-day public consultation where member institutions and other stakeholders were asked to provide comments on proposed changes to the DPS. Comments were reviewed and a summary of the feedback was published in January 2023. CDIC’s review of the DPS formally concluded with the publication of a final set of proposed changes in July 2023. During this period, CDIC met and discussed the proposed changes with key stakeholders.

Instrument choice

There are no available alternatives in instruments. Changes to the DPS must be made by the Board, and approved by the Minister of Finance, in a by-law made under subsection 21(2) of the CDIC Act.

Regulatory analysis

Benefits and costs

Benefits and costs for stakeholders are expected to be neutral. Given the substantial changes and improved risk sensitivity of the DPS scorecard, there may be premium increases for some member institutions and premium decreases for other member institutions.

Small business lens

Analysis under the small business lens concluded that the proposal would not impact small businesses in Canada.

One-for-one rule

The one-for-one rule does not apply to the proposed By-law. It would not impose any additional regulatory costs or administrative burden on businesses.

Regulatory cooperation and alignment

The proposed By-law is not related to a work plan or commitment under a formal regulatory cooperation forum.

Effects on the environment

No effects based on the environment have been identified for this proposal.

Gender-based analysis plus

No impacts based on gender, and no other identity factors, have been identified for this proposal.

Rationale

The proposed By-law would achieve the stated objective and address the issues identified above.

Implementation, compliance and enforcement, and service standards

The proposed By-law would come into force on April 1, 2026. There are no compliance or enforcement issues.

Contact

Ran Yang
Senior Legal Counsel
Legal Services
Canada Deposit Insurance Corporation
Email: ryang@cdic.ca

PROPOSED REGULATORY TEXT

Notice is given that the Board of Directors of the Canada Deposit Insurance Corporation proposes to make the annexed Canada Deposit Insurance Corporation Differential Premiums By-law under subsection 21(2)footnote a of the Canada Deposit Insurance Corporation Act footnote b.

Interested persons may make representations concerning the proposed By-law within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Ran Yang, Senior Legal Counsel, Legal Services, Canada Deposit Insurance Corporation, 50 O’Connor Street, 17th Floor, Ottawa, Ontario K1P 6L2 (email: ryang@cdic.ca).

Ottawa, January 9, 2025

Gina Byrne
Vice-President (Member Risk and Resolution) of the Canada Deposit Insurance Corporation

Canada Deposit Insurance Corporation Differential Premiums By-law

Definitions

Definitions

1 The following definitions apply in this By-law.

Act
means the Canada Deposit Insurance Corporation Act. (Loi)
fall return
means a return referred to in paragraph 5(1)(a). (déclaration automnale)
new
, with respect to a member institution, means that the member institution has been operating as a member institution for less than two full premium years and, if it was formed by an amalgamation, none of its amalgamating institutions were member institutions immediately before the amalgamation. (nouvelle)
spring return
means a return referred to in paragraph 5(1)(b). (déclaration printanière)
stage of intervention
means a stage of intervention that is assigned as a result of an assessment carried out in accordance with the Guide to Intervention for Federally Regulated Deposit-Taking Institutions, published by the Office of the Superintendent of Financial Institutions, as amended from time to time. (stade d’intervention)
subsidiary
has the same meaning as in section 2 of the Bank Act. (filiale)

Annual Premium

Calculation

2 (1) For the purposes of paragraphs 21(1)(a) and 23(1)(a) of the Act, the annual premium for a member institution is the greater of

Late submission of fall return

(2) If a member institution’s fall return is submitted after October 31 of the year preceding the premium year but before July 3 of the premium year, C in the formula in paragraph (1)(b) is replaced by the formula

((C × E) + (F × G)) ÷ H
where
C
is the percentage referred to in subparagraph (i) of the description of C in paragraph (1)(b);
E
is the number of days in the period beginning on the day after the day on which the member institution submits its fall return to the Corporation and ending on October 31 of the premium year;
F
is the percentage set out in column 3 of Schedule 1 that corresponds to premium category 5;
G
is the number of days in the period beginning on November 1 of the year preceding the premium year and ending on the day on which the member institution submits its fall return to the Corporation; and
H
is the number of days in the period beginning on November 1 of the year preceding the premium year and ending on October 31 of the premium year.

Late submission of spring return

(3) If a member institution’s spring return is submitted after April 30 of the calendar year in which the premium year begins but before July 3 of the premium year, D in the formula in paragraph (1)(b) is replaced by the formula

((D × I) + (F × J)) ÷ K
where
D
is the percentage referred to in subparagraph (i) of the description of D in paragraph (1)(b);
I
is the number of days in the period beginning on the day after the day on which the member institution submits its spring return to the Corporation and ending on April 30 of the premium year;
F
is the percentage set out in column 3 of Schedule 1 that corresponds to premium category 5;
J
is the number of days in the period beginning on May 1 of the premium year and ending on the day on which the member institution submits its spring return to the Corporation; and
K
is the number of days in the premium year.

Exception — 2026–2027 premium year

(4) Despite subsection (1), for the purposes of paragraphs 21(1)(a) and 23(1)(a) of the Act, the annual premium for a member institution for the premium year that begins on May 1, 2026 is the greater of

Premium Category

Classification

Corporation’s obligation

3 (1) The Corporation must, not later than January 15 and July 15 of each year, notify every member institution of the premium category in which the member institution is, as of those dates, to be classified in accordance with subsections (2) to (8).

Determination

(2) Subject to subsections (3) to (8), the premium category in which a member institution is to be classified as of January 15 or July 15 is the category set out in column 1 of Schedule 1 that corresponds to the member institution’s total score set out in column 2, as determined under section 4 for the purpose of its classification as of that date.

Exception — new member institution

(3) A new member institution must be classified in premium category 2 unless it

Exception — stage of intervention

(4) A new member institution that has been assigned a stage of intervention must, unless it is also a member institution referred to in paragraph (3)(c) or (d), be classified in premium category 3.

Exception — bridge institution

(5) A member institution that is a bridge institution must be classified in premium category 1.

Exception — subsidiary of member institution

(6) A member institution that is a subsidiary of another member institution must be classified in the same premium category in which the member institution of which it is a subsidiary is classified, unless that member institution is new and the subsidiary member institution is not new.

Exception — amalgamation of new member institutions

(7) A member institution that was formed by an amalgamation must, if all of its amalgamating member institutions would be new if they were still operating, be classified in

Exception — return not submitted

(8) A member institution must be classified in premium category 5 if

Total Score

Calculation

4 (1) A member institution’s total score is equal to the sum of

Exception — parent of not new subsidiary

(2) Despite subsection (1), the total score for a member institution that started operating as a member institution during the premium year that ends in the calendar year in which the classification occurs, that was not formed by an amalgamation involving a member institution and that has at least one subsidiary that is a member institution that meets the following requirements is equal to the highest total score of any such subsidiary:

Quantitative Factors

Submission of documents

5 (1) Every member institution must submit to the Corporation

Exception

(2) Subsection (1) does not apply to a member institution to which any of subsections 3(3) to (7) or 4(2) apply.

Financial information

(3) The information provided by a member institution under subsection (1) must be

Adjustments

(4) The Corporation may make any necessary adjustments to a fall return, spring return or any other document submitted under this section if it has not been completed as required under this section.

Assignment of scores

6 The Corporation must assign to a member institution that submits a fall return before January 15 of the calendar year after the calendar year in which it is due or a spring return before July 3 of the calendar in which it is due, for each factor set out in column 1 of Schedule 2, the score set out in column 3 that corresponds to the description set out in column 2 that, on the basis of the following information, applies to the member institution:

Quantitative score

7 (1) A member institution’s fall quantitative score for a premium year is, subject to subsections (2) and (3), equal to the sum of the scores assigned to the member institution under paragraph 6(a) on the basis of the fall return that is due in the previous premium year or, if applicable, the revised fall return. Its spring quantitative score for a premium year is, subject to subsections (2) and (4), equal to the sum of the scores assigned to it under paragraph 6(b) on the basis of the spring return that is due in the previous premium year or, if applicable, the revised spring return.

Exceptions

(2) A member institution’s fall or spring quantitative score is equal to the corresponding sum referred to in subsection (1) multiplied by

Recently amalgamated institution — fall score

(3) The fall quantitative score for a premium year of a member institution that was formed during the previous premium year by an amalgamation involving at least one member institution is equal to the highest fall quantitative score of any of its amalgamating institutions that are member institutions if

Recently amalgamated institution — spring score

(4) The spring quantitative score for a premium year of a member institution that was formed during the previous premium year by an amalgamation involving at least one member institution is equal to the highest spring quantitative score of any of its amalgamating institutions that are member institutions if the amalgamation occurred

Qualitative Factors

Examiner’s Rating

Definition of examiner’s rating

8 (1) In this section, examiner’s rating means the rating on a scale of one to eight that is assigned to a member institution by one of the following in the course of carrying out their duties:

Assignment of score — January 15

(2) On January 15 of each calendar year, the Corporation must — to each member institution that has a fall quantitative score determined in accordance with subsection 7(1) or (2) for the premium year that begins in that calendar year — assign

Exception — amalgamated institution

(3) On January 15 of each calendar year, the Corporation must — to each member institution that has a fall quantitative score determined in accordance with subsection 7(3) for the premium year that begins in that calendar year — assign a score equal to the score assigned under subsection (2) to the amalgamating member institution whose fall quantitative score was used under subsection 7(3) to determine the member institution’s fall quantitative score for that premium year.

Assignment of score — July 15

(4) On July 15 of each premium year, the Corporation must — to each member institution that has a spring quantitative score determined in accordance with subsection 7(1) or (2) for that premium year — assign

Exception — amalgamated institution

(5) On July 15 of each premium year, the Corporation must — to each member institution that has a spring quantitative score determined in accordance with subsection 7(4) for that premium year — assign a score equal to the score assigned under subsection (4) to the amalgamating member institution whose spring quantitative score was used under subsection 7(4) to determine the member institution’s spring quantitative score for that premium year.

Risk and Resolvability Score

Definitions

9 (1) The following definitions apply in this section.

materially non-compliant
has the meaning assigned by paragraph 11(4)(c) of the Canada Deposit Insurance Corporation Resolution Planning By-law. (sensiblement non conforme)
partially non-compliant
has the meaning assigned by paragraph 11(4)(b) of the Canada Deposit Insurance Corporation Resolution Planning By-law. (partiellement non conforme)
resolution plan
has the same meaning as in section 1 of the Canada Deposit Insurance Corporation Resolution Planning By-law. (plan de règlement)

Domestic systemically important banks

(2) The Corporation must, on January 15 of each calendar year on the basis of information available to the Corporation on November 1 of the previous calendar year and on July 15 of each calendar year on the basis of information available to the Corporation on May 1 of that calendar year, assign one of the following scores to each member institution that is a domestic systemically important bank if the member institution has, for premium year that begins in that calendar year, a fall quantitative score under section 7 in the case of the January 15 assignment or a spring quantitative score under that section in the case of the July 15 assignment:

Other member institutions

(3) The Corporation must, on January 15 of each calendar year on the basis of information available to the Corporation on November 1 of the previous calendar year and on July 15 of each calendar year on the basis of information available to the Corporation on May 1 of that calendar year, assign one of the following scores to each member institution that is not a domestic systemically important bank if the member institution has, for the premium year that begins in that calendar year, a fall quantitative score under section 7 in the case of the January 15 assignment or a spring quantitative score under that section in the case of the July 15 assignment:

Qualitative Score

Calculation

10 A member institution’s fall qualitative score for a premium year is equal to the sum of the scores assigned to the member institution under subsection 8(2) or (3) and section 9 on January 15 of the calendar year in which that premium year begins. Its spring qualitative score for a premium year is equal to sum of the scores assigned to it under subsection 8(4) or (5) and section 9 on July 15 of that premium year.

Reclassification

Fall return after January 14

11 If a member institution submits a fall return after January 14 but not later than July 2 of the calendar year after the calendar year in which it was due or submits a revised fall return referred to in subparagraph 5(1)(e)(i) during that period

Transitional Provisions, Amendments to this By-law, Consequential and Related Amendments, Repeal and Coming into Force

Transitional Provisions

Existing new member institution

12 The references to “premium category 2” in the following provisions are to be read, in relation to a member institution that became a member institution before the day on which this By-law comes into force, as “premium category 1”:

Existing new staged member institution

13 The references to “premium category 3” in clause (iii)(B) of the description of C and clause (ii)(B) of the description of D in the formula in paragraph 2(1)(b) are to be read, in relation to a member institution that became a member institution before the day on which this By-law comes into force, as “premium category 1”.

Amendment to this By-law

14 Subparagraph 8(4)(a)(ii) of this By-law is replaced by the following:

Consequential and Related Amendments to the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law

15 The definition examiner in subsection 2(1) of the schedule to the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law footnote 1 is replaced by the following:

examiner
means
  • (a) in respect of a federal member institution, the Superintendent; and
  • (b) in respect of a provincial member institution
    • (i) the Corporation or a person designated under paragraph 28(a) of the Act, or
    • (ii) the government of a province, or an agent of the government of a province, with which the Corporation has entered into an agreement under section 38 of the Act. (inspecteur)

16 Paragraph (g) of the definition prescribed information in subsection 2(1) of the schedule to the By-law is replaced by the following:

17 Subsection 9(1) of the schedule to the By-law is replaced by the following:

9 (1) The member institution shall, if required to do so under the Canada Deposit Insurance Corporation Differential Premiums By-law, submit to the Corporation the documents referred to in subsection 5(1) of that By-law within the time required by that By-law.

18 Paragraph 24(1)(g) of the schedule to the By-law is replaced by the following:

Related Amendment to the Canada Deposit Insurance Corporation Prescribed Practices Premium Surcharge By-law

19 Paragraph 2(1)(b) of the Canada Deposit Insurance Corporation Prescribed Practices Premium Surcharge By-law footnote 2 is replaced by the following:

Repeal

20 The Canada Deposit Insurance Corporation Differential Premiums By-law footnote 3 is repealed.

Coming into Force

April 29, 2026

21 (1) Subject to subsection (2), this By-law comes into force on April 29, 2026.

Exception

(2) Section 14 comes into force on July 16, 2026.

SCHEDULE 1

(Paragraph 2(1)(b) and subsections 2(2) and (3) and 3(2))

Premium Categories
Item

Column 1

Premium Category

Column 2

Total Score

Column 3

Percentage

1 1 ≥ 90 22.5%
2 2 ≥ 80 and < 90 27%
3 3 ≥ 65 and < 80 40.5%
4 4 ≥ 50 and < 65 72.9%
5 5 < 50 100%

SCHEDULE 2

(Section 6)

Quantitative Factors
Item

Column 1

Factor

Column 2

Description

Column 3

Score

1 Total Loss Absorbing Capacity (TLAC) Leverage Ratio table b2 note 1 (a) ≥ 110% of the Minimum TLAC Leverage Ratio 5
(b) ≥ 100% and < 110% of the Minimum TLAC Leverage Ratio 3
(c) < 100% of the Minimum TLAC Leverage Ratio 0
2 Common Equity Tier 1 (CET1) Capital Ratio and Risk-Based TLAC Ratio table b2 note 1 (a) CET1 Capital Ratio is ≥ Supervisory Target CET1 Capital Ratio and Risk-based TLAC Ratio is ≥ Supervisory Target Risk-based TLAC Ratio 5
(b) Either CET1 Capital Ratio is < Supervisory Target CET1 Capital Ratio or Risk-based TLAC Ratio is < Supervisory Target Risk-based TLAC Ratio 3
(c) CET1 Capital Ratio is < Supervisory Target CET1 Capital Ratio and Risk-based TLAC Ratio is < Supervisory Target Risk-based TLAC Ratio 0
3 Leverage Ratio table b2 note 2 (a) ≥ 110% of the Authorized Leverage Ratio 5
(b) ≥ 100% and < 110% of the Authorized Leverage Ratio 3
(c) < 100% of the Authorized Leverage Ratio 0
4 CET1 Capital Ratio and Total Capital Ratio table b2 note 2 (a) CET1 Capital Ratio is ≥ Supervisory Target CET1 Capital Ratio and Total Capital Ratio is ≥ Supervisory Target Total Capital Ratio 5
(b) CET1 Capital Ratio is < Supervisory Target CET1 Capital Ratio or Total Capital Ratio is < Supervisory Target Total Capital Ratio 3
(c) CET1 Capital Ratio is < Supervisory Target CET1 Capital Ratio and Total Capital Ratio is < Supervisory Target Total Capital Ratio 0
5 CET1 Capital Ratio and Total Capital Ratio table b2 note 3 (a) CET1 Capital Ratio is ≥ Supervisory Target CET1 Capital Ratio and Total Capital Ratio is ≥ Supervisory Target Total Capital Ratio 10
(b) CET1 Capital Ratio is < Supervisory Target CET1 Capital Ratio or Total Capital Ratio is < Supervisory Target Total Capital Ratio 6
(c) CET1 Capital Ratio is < Supervisory Target CET1 Capital Ratio and Total Capital Ratio is < Supervisory Target Total Capital Ratio 0
6 Return on Risk-weighted Assets (a) ≥ 1.6% 5
(b) ≥ 0.75% and < 1.6% 3
(c) < 0.75% (including negative results) 0
7 Mean Adjusted Net Income Volatility (a) ≥ 0 and ≤ 0.75 5
(b) > 0.75 and ≤ 1.5 3
(c) > 1.5 0
(d) Result is negative or mean net income or loss is 0 0
(e) Not applicable 0
8 Net Impaired Assets to Total Capital (a) ≥ 0% and < 15% 5
(b) ≥ 15% and < 30% 3
(c) ≥ 30% 0
(d) < 0% 0
9 Three-Year Moving Average Asset Growth (a) ≤ 15% (including negative results) 5
(b) > 15% and ≤ 40% 3
(c) > 40% 0
(d) Not applicable 0
10 Real Estate Asset Concentration (a) Ratio of total mortgage loans to sum of total mortgage loans, non-mortgage loans, securities and acceptances ("threshold ratio") is < 10% 5
(b) Threshold ratio is ≥ 10% and concentration of each mortgage loan type is low-risk 5
(c) Threshold ratio is ≥ 10% and concentration of each mortgage loan type is either low-risk or medium-risk 3
(d) Threshold ratio is ≥ 10% and concentration of at least one mortgage loan type is high-risk 0
11 Asset Encumbrance Measure (a) Unencumbered Asset Concentration is ≤ 100% 5
(b) Unencumbered Asset Concentration is > 100% and Pledged Asset Ratio is < 40% 3
(c) Unencumbered Asset Concentration is > 100% and Pledged Asset Ratio is ≥ 40% 0
12 Aggregate Commercial Loan Concentration Ratio (a) Threshold ratio referred to in paragraph (a) of item 10 is > 90% 5
(b) < 100% and threshold ratio referred to in paragraph (a) of item 10 is ≤ 90% 5
(c) ≥ 100% and < 300% and threshold ratio referred to in paragraph (a) of item 10 is ≤ 90% 3
(d) ≥ 300% and threshold ratio referred to in paragraph (a) of item 10 is ≤ 90% 0
13 High Quality Liquid Assets to Short-Term Funding table b2 note 4 (a) ≥ 15% 5
(b) ≥ 10% and < 15% 3
(c) < 10% 0
14 Liquidity Coverage Ratio table b2 note 1 (a) ≥ 110% 7.5
(b) ≥ 100% and < 110% 4
(c) < 100% 0
15 Stable Funding Ratio table b2 note 4 (a) ≥ 45% 5
(b) ≥ 20% and < 45% 3
(c) < 20% 0
16 Brokered Deposit Ratio table b2 note 4 (a) < 15% 5
(b) ≥ 15% and < 25% 3
(c) ≥ 25% 0
17 Net Stable Funding Ratio table b2 note 1 (a) ≥ 110% 7.5
(b) ≥ 100% and < 110% 4
(c) < 100% 0

Table b2 note(s)

Table b2 note 1

This factor applies only to member institutions that are domestic systemically important banks.

Return to table b2 note 1 referrer

Table b2 note 2

This factor applies only to member institutions that are Category I or II SMSBs under the Small and Medium-Sized Deposit-Taking Institutions (SMSBs) Capital and Liquidity Requirements – Guideline.

Return to table b2 note 2 referrer

Table b2 note 3

This factor applies only to member institutions that are Category III SMSBs under the Small and Medium-Sized Deposit-Taking Institutions (SMSBs) Capital and Liquidity Requirements – Guideline.

Return to table b2 note 3 referrer

Table b2 note 4

This factor applies only to member institutions that are not domestic systemically important banks.

Return to table b2 note 4 referrer

SCHEDULE 3

(Paragraphs 8(2)(a) and (4)(a))

Examiner’s Rating
Item

Column 1

Examiner’s rating

Column 2

Score

1 1 25
2 2 22
3 3 20
4 4 15
5 5 10
6 6 8
7 7 0
8 8 0

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