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Quebec regulator designates Desjardins Group as ‘systemically important’


June 20, 2013   by Canadian Underwriter


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Quebec’s financial regulator has designated Desjardins Group as a “domestic systemically important financial institution,” placing extra capitalization requirements on the company and putting it in a similar camp as Canada’s big six banks.

Desjardins Group systemically important institution

The Autorité des marchés financiers (AMF), which oversees Quebec’s financial sector, said the designation announced Thursday will place additional capitalization and disclosure requirements on Desjardins, as well as “enhanced supervision.”

“The AMF is in regular communication with Desjardins Group to ensure it provides a framework consistent with international standards, particularly those pertaining to capital adequacy,” the organization said in a release. “The designation of Desjardins Group as a systemically important financial institution is part of this process.”

The designation is based on criteria set out by the Basel Committee on Banking Supervision. In October 2012, the multi-country committee released a document called “A Framework for Dealing with Domestic Systemically Important Banks.”

That framework says that regulators should establish a methodology for assessing applicable financial institutions and their systemic importance.

Based on that, the AMF conducted assessments over the past few months and has now published a notice (available in French only) that outlines the overall guidance to be applied for Desjardins.  

“These expectations were harmonized with those applicable to other systemically important financial institutions in Canada,” the AMF noted. In March, the Office of the Superintendent of Financial Institutions of Canada (OSFI) designated the country’s six largest banks as systemically important.

The designation means that effective Jan. 1, 2016, Desjardins Group will be imposed an additional 1% Tier 1 capital requirement, which will be met primarily through reserves and capital shares, according to the AMF.


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