Canada's Office of the Superintendent of Financial Institutions has launched a 90-day public consultation on draft revisions to its large exposure limits framework. The proposal would extend the 2019 approach now used for domestic systemically important banks to Category 1 and Category 2 small and medium sized banks, replacing the 1994 large exposure guideline for those institutions, while removing Category 3 SMSBs and foreign bank branches from the guideline's scope. For Category 1 and Category 2 SMSBs, the draft would cap total exposures to a single counterparty or a group of connected counterparties at 25% of Tier 1 capital, measure exposures net of credit risk mitigation in line with capital requirements, update the method for identifying connected counterparties, and introduce quarterly reporting using the same template as larger banks. The consultation runs until August 19, 2026. OSFI expects to publish the final guideline in February 2027, with implementation planned for November 1, 2027, or January 1, 2028 for institutions with fiscal year ends on October 31 or December 31, respectively.
Office of the Superintendent of Financial Institutions2026-05-21
Canada's Office of the Superintendent of Financial Institutions launches consultation on revised large exposure limits for Category 1 and 2 smaller banks
The Office of the Superintendent of Financial Institutions has launched a public consultation on draft revisions to its large exposure limits framework for small and medium sized banks. The proposal would extend the 2019 large exposure approach to Category 1 and Category 2 SMSBs, including a 25% of Tier 1 capital cap per counterparty or connected group, updated connected counterparty identification, netting of exposures in line with capital rules, and quarterly reporting, while removing Category 3 SMSBs from the guideline’s scope.