Ottawa's Budget Adds a Competition Mandate to OSFI — SkimNews
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- OSFI's governing law will be amended to add a "secondary competition objective," while the regulator's current mandate focuses solely on maintaining a stable and sound financial system.
- The federal budget establishes a one-year timeline for decisions on applications to create new banks, trust companies and insurers, following a June pilot project launched by OSFI superintendent Peter Routledge to strip years off the process.
- Ottawa plans to raise the widely-held threshold for bank shares from $12 billion to $25 billion in equity and exempt foreign bank subsidiaries with less than $8 billion in equity, provided the parent is widely held and listed on a recognized foreign stock exchange.
- Troubled banks would gain "exit options" to transfer assets and liabilities to other financial institutions in periods of stress, while credit unions receive easier ways to access capital and expand their reach.
- Canada's deposit insurance framework would be updated to raise the limit to $250,000 from $100,000 and remove the limit on eligible deposits in registered and tax-free accounts.
- Peter Routledge described OSFI's capital framework as a "competitive imbalance" between smaller lenders on standardized approaches and larger banks using internal ratings, in a market where the Big Six hold more than 90 per cent of the share.
- Anthony G. Ostler, chief executive of the Canadian Bankers Association, said expanding OSFI's mandate to include growth and competition balances financial stability with economic resilience and gives institutions more flexibility and choice.
Why it matters: The Big Six already hold more than 90 per cent of Canadian banking, so OSFI's new competition mandate, a one-year licensing clock and a $12-billion-to-$25-billion wide-holding threshold hand smaller lenders and credit unions concrete room to grow, while depositors gain a $250,000 insurance ceiling.
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