In addition to federal regulators’ designation of the big six banks as domestically systemically important financial institutions (DSIFIs), Quebec’s Autorité des marchés financiers (AMF) is designating Desjardins Group as systemically important, too, which brings added regulatory requirements for the firm.
The AMF announced Wednesday that it has determined that Desjardins is a DSIFI, according to criteria established by the Basel Committee on Banking Supervision. “This status will result in additional capitalization and disclosure requirements, as well as enhanced supervision,” it says.
The Basel Committee set out its framework for dealing with domestic systemically important banks in October of last year. And, the AMF notes that it calls on regulators to “establish a methodology to assess the degree of systemic importance for their jurisdictions and put in place measures applicable to financial institutions designated as systemically important.”
As a result, it has been assessing the firms under its jurisdiction, and is now publishing a notice regarding Desjardins that sets out the additional requirements to be applied to the firm; which, it notes, is harmonized with the other systemically important financial institutions in Canada. Among other things, effective January 1, 2016, the firm will face an additional 1% Tier 1 capital requirement, which the AMF says will be met primarily through reserves and capital shares.