Canada’s version of globally agreed capital rules has been deemed in line with the standards established under the post-crisis global framework, known as Basel III.

The Basel Committee on Banking Supervision Friday published a report Friday assessing Canada’s implementation of the latest edition of the Basel capital framework, which finds that overall, the Canadian rules are “compliant” with the Basel III standards. Indeed, the committee notes that some aspects of Canada’s capital rules are more rigorous than the requirements set by the Basel framework.

The assessment examined 14 components of the capital framework and 13 of them were graded as “compliant”, the report notes. And, one component, the definition of capital, was assessed as being “largely compliant” with the Basel standards.

The report notes the one deviation in the Canadian rules that may be material concerns the treatment of preferred shares. It says that Canadian regulators do not require preferred shares to include the automatic conversion trigger required under the Basel framework. The Office of the Superintendent of Financial Institutions (OSFI) considers these sorts of preferred shares to be equity, which do not require any capital ratio triggers under the Basel framework, the report explains.

Additionally, a less significant deviation relates to the treatment of defined benefit pension fund assets, the report notes; where OSFI excludes certain assets relating to foreign subsidiaries from the deduction requirement under the Basel framework. And, the assessment also identifies two interpretative issues that would benefit from further guidance from the Basel Committee to ensure consistency, it notes.

The report notes that its verdict factors in the latest amendments to the Canadian capital rules, which were made in April, in an effort to further align OSFI’s capital rules with the Basel framework. In order to assess Canada’s compliance with the Basel standards, the assessment team held discussions with senior officials and technical staff of OSFI, senior representatives from the six largest Canadian banks, one audit firm and three credit rating agencies.

The report published today is the ninth in a series of reports on implementation of the Basel III standards. It has already published reports on Australia, Brazil, China, Japan, Singapore and Switzerland and preliminary reports on the European Union and the U.S. Follow-up assessments on the EU and the U.S. are under way, it notes.