Canada’s Office of the Superintendent of Financial Institutions (OSFI) released a package of updates covering bank and insurer capital, supervision, climate reporting, and guidance streamlining, including a 90-day public consultation on proposed revisions to the Capital Adequacy Requirements Guideline for 2027 and the final Minimum Capital Test Guideline for 2026 for property and casualty insurers. The draft 2027 capital proposals include lower standardized risk weights for certain real estate exposures, including reducing the base risk weight for low-rise residential real estate to 130% from 150%, introducing a 90% risk weight for residential acquisition, development, and construction (ADC) projects with at least 75% pre-sales, and a 110% preferential risk weight for commercial ADC loans with 50% pre-sales or pre-leases up to a 70% loan-to-value. The draft would also allow some ADC projects with loan-to-value ratios below 80% to be treated as substantially complete and receive income-producing commercial real estate treatment when a certificate of occupancy has been issued. Other proposed changes include lower risk weights for Corporate Small and Medium Size Enterprise exposures and for unrated non-investment-grade corporate exposures under the standardized approach, and a reduction to 15% from 20% for exposures to Canadian systemically important banks, including their covered bonds. The final 2026 MCT guideline simplifies the unexpired coverage formula for insurance risk, tightens eligibility of “funds withheld” receivables for branches of foreign insurers, and removes OSFI’s prior review requirement for certain reinsurance arrangements, alongside user-fee-related capital confirmation updates and other clarifications. OSFI also published a post-implementation review of its Supervisory Framework, identifying planned refinements to the “weakest link” approach used in setting the Overall Risk Rating and to rating methodology clarity, and released lessons learned from the first Climate Risk Returns submissions alongside updated returns and further removals from its guidance library. The capital consultation runs until February 18, 2026, while the MCT guideline takes effect on January 1, 2026. Supervisory Framework refinements are to be implemented in phases through the end of OSFI’s 2026–27 fiscal year, with more detail to be shared at Industry Day on December 4, 2025. OSFI plans to rescind or remove 32 additional guidance documents by December 31, 2025.
Office of the Superintendent of Financial Institutions 2025-11-20
Office of the Superintendent of Financial Institutions consults on 2027 bank capital changes and finalises 2026 property and casualty insurer capital test
Canada’s Office of the Superintendent of Financial Institutions (OSFI) updated bank and insurer capital, supervision, and climate reporting, including a consultation on the 2027 Capital Adequacy Requirements Guideline and the final 2026 Minimum Capital Test Guideline. Key proposals include reduced risk weights for certain real estate and corporate exposures, and simplifications in insurance risk coverage. OSFI also reviewed its Supervisory Framework and shared insights from Climate Risk Returns submissions.