Interest in small bank formation growing: LePan

Speaking before the Standing Senate Committee on Banking, Trade and Commerce on Thursday, the federal financial services regulator says thus far Bill C-8’s changes have generated interested in the creation of small banks.
So far, six “small, closely held domestic banks” have been created since the new legislation was put into force, and about a dozen other expressions of interest have been made, says Nick LePan, of the Office of the Superintendent of Financial Institutions (OSFI). Superintendent LePan notes, “when the new policy was developed, both OSFI and the government accepted there might be more risk in the system, but that OSFI’s ability to focus on early intervention when problems emerged was sufficient. It is premature to conclude how well the new regime is working. However, in my view, to date, the new entrants have generally been profitable and meeting their business plans as originally set out.”
LePan’s testimony also centered on the efforts OSFI has made to increase regulatory efficiency. He specifically points out the introductions of the new capital test for property & casualty insurers, which was produced jointly with provincial regulators. Once this test is fully adopted at the provincial levels, he notes, it will “result in a reduction of up to one-half the amount of data filed with OSFI” by most federally-regulated p&c insurers.
He adds that a similar initiative to streamline data collection has been finalized for life companies.