OSFI has proposed eliminating disclosure requirements in guidelines dealing with general allowances for credit risk and impaired loans.

In 2001, it released a guideline that provides banks, authorized foreign banks and federally regulated trust and loan companies with guidance on the regulatory framework for general allowances for credit risks. OSFI has revisited the disclosure requirements appearing in that guideline, given that Canadian GAAP requires similar disclosures and that general allowances have gained general acceptance and understanding in the marketplace.

“OSFI has concluded that it is satisfied with the disclosure requirements under GAAP and is prepared to rely on them without the need for greater specification at this time,” it says. “Accordingly, in the interest of avoiding duplication and considering the disclosure requirements and practices of other major jurisdictions, OSFI proposes to withdraw the disclosure section.” It says it will monitor the public disclosure practices of institutions in this area and may revisit them at a future date if needed.

Additionally, a consequential amendment to the guideline dealing with impaired loans, in which similar disclosures appear, will also be made for consistency.

OSFI says it intends to conduct a comprehensive review of the general allowance guideline once it and the industry gain experience and comfort with the robustness of new risk management systems under Basel II. “Accordingly, OSFI is not seeking comments at this time on aspects of the guideline other than the removal of disclosures as proposed in this current revision.”

Comments regarding the draft guideline are due by July 4.