Further steps on bail-in regime will strengthen CDIC’s power to resolve large banks in failure

OTTAWA – June 19, 2017 – New elements of the Government’s bail-in regime for domestic systemically important banks (D-SIBs) are being advanced that will strengthen Canada’s resolution regime, the Canada Deposit Insurance Corporation said today.

These measures include consultations on:

• Draft regulations on a bail-in regime for D-SIBs including:
  • Bank Recapitalization (Bail-in) Issuance Regulations
  • Compensation Regulations
  • Bank Recapitalization (Bail-in) Conversion Regulations
• Draft guidelines to ensure that D-SIBs have sufficient loss absorbing capacity to support their recapitalization in the unlikely event of a failure

The bail-in power would allow CDIC to convert some of a failing D-SIB’s debt into common shares in order to recapitalize the bank and help restore it to viability. The bail-in regime builds on CDIC’s existing toolkit and provides another tool for CDIC to keep a failing D-SIB open and operating so it could continue to serve its customers.

Deposits are not affected by the bail-in regime.

“All deposits are excluded from the bail-in regime,” said CDIC President and CEO Michèle Bourque. “This means chequing accounts, savings accounts and term deposits such as GICs.”

The Canadian bail-in regime aligns with the Financial Stability Board’s Key Attributes of Effective Resolution Regimes, a set of international standards developed following the global financial crisis.

CDIC is a federal Crown corporation that contributes to the stability of the Canadian financial system by providing deposit insurance against the loss of eligible deposits at member institutions in the event of failure. CDIC protects close to $750 billion of savings held by its member institutions which include banks, federally regulated credit unions as well as loan and trust companies and associations governed by the Cooperative Credit Associations Act that take deposits. CDIC is funded by premiums paid by member institutions and does not receive public funds to operate.

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Further information:

Brad Evenson
Director, Communications and Public Affairs
Tel: 613.943.4395
E-mail: media@cdic.ca