Canada Publishes Consultation On Bail-In Regime

The Canadian government recently published for comment a consultation paper on a proposed bail-in regime applicable to Canada's domestic systemically important banks (D-SIBs). The bail-in regime, formally referred to as a Taxpayer Protection and Bank Recapitalization Regime, would grant to the Government of Canada the power to permanently convert "eligible liabilities" of the D-SIB into common shares.

The power would also allow for, but not require, the permanent cancellation of the whole or a part of the existing common shares. This power could only be exercised if the regulator (the Superintendent of Financial Institutions) determined that the bank had ceased or was about to cease being viable and the full conversion of the bank's non-viability contingent capital (NVCC) instruments had occurred.