Domestic Systemically Important Banks: A New Framework For Assessment And Loss Absorbency

On October 11, 2012 the Basel Committee on Banking Supervision (Basel Committee), working with the Financial Stability Board, finalized and released its twelve principles for the assessment methodology and higher loss absorbency (HLA) requirements for domestic systemically important banks (D-SIBs).  A Framework for Dealing with Domestic Systemically Important Banks (D-SIB Framework) is complementary to the Basel Committee's November 2011 framework related to global systemically important banks (G-SIBs). 

To date, no domestic Canadian bank has been identified as a G-SIB.  In light of the factors identified in the D-SIB Framework, it is likely that the largest Canadian banks could be categorized as D-SIBs based on an assessment methodology, the details of which are yet to be developed by the Canadian bank regulator, that would consider, among other factors, those banks' relative concentration within the banking sector as a whole.  Banks identified as D-SIBs may be