Office of the Superintendent of Financial Institutions

Office of the Superintendent of Financial Institutions

April 22, 2008 10:33 ET

OSFI Clarifies its Role in ABCP Issue

TORONTO, ONTARIO--(Marketwire - April 22, 2008) - The Office of the Superintendent of Financial Institutions (OSFI) today further clarified its role in the ongoing Asset-Backed Commercial Paper (ABCP) issue.

In a briefing to news media, Superintendent Julie Dickson stated that the freezing of the non-bank ABCP market in Canada has rightfully led to a lot of questions.

"It is important to get to the bottom of what happened and OSFI fully supports these efforts and will continue to provide input into this process," she said.

During the briefing, the Superintendent also emphasized that:

- OSFI's role is to help promote a safe and sound banking sector in Canada, to the benefit of all Canadians, especially depositors. This means that when Canadians deposit money into their bank accounts, they expect that the money will be safe, secure and available when they need access to it.

- OSFI Guideline B-5 was prudent and necessary in order to set appropriate capital requirements for Canadian banks. It also clarified roles and responsibilities in securitization structures, for the information of all participants.

- OSFI does not oversee the firms that created the non-bank ABCP, so these firms are not subject to OSFI capital guidelines (such as OSFI guideline B-5). OSFI guidelines also do not apply to the offshore banks that negotiated the bulk of the liquidity lines to non-bank ABCP conduits; they are subject to the capital rules of their home countries.

The Superintendent stated that, "It is clear that capital requirements on Canadian banks did not drive the uniqueness of the non-bank ABCP market in Canada. There are a number of factors that contributed to the current situation and I believe a fulsome discussion and review are critical. OSFI looks forward to participating in these discussions."

A backgrounder on this issue can be accessed here: http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?ArticleID=2312

Created in 1987 by an Act of Parliament, the Office of the Superintendent of Financial Institutions (OSFI) is the primary regulator and supervisor of federally registered deposit-taking institutions, insurance companies, and federally registered private pension plans. OSFI's mandate is to advance and administer a regulatory framework that contributes to public confidence in a strong, stable and competitive financial system.

Contact Information