Posted by: youngragingbull | March 26, 2013

Too Big to Fail: Canada’s largest 6 banks

Canada’s six largest banks were designated as ‘too big to fail’ on Tuesday by the Office of the Superintendent of Financial Institutions, the federal regulator that oversees the financial industry in the country.

The OSFI said the designation stems from a framework issued by the Basel committee on banking oversight in October that set out guidelines for assessing domestic financial institutions.

Under the OSFI requirements, the Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank will be subject an additional one percent capital buffer for risk, meaning they will have to hold more assets in reserve to protect against a sudden run on deposits.

The banks will need to have a common equity tier 1 ratio of eight percent as compared with seven percent for smaller, less important financial institutions as of Jan. 1, 2016.

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