ARCHIVED — Vol. 145, No. 42 — October 15, 2011

By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law

Statutory authority

Canada Deposit Insurance Corporation Act

Sponsoring agency

Canada Deposit Insurance Corporation

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the By-law.)

Description

The Board of Directors of the Canada Deposit Insurance Corporation (“CDIC”) made the Canada Deposit Insurance Corporation Differential Premiums By-law (the “By-law”) on March 3, 1999, pursuant to subsection 21(2) and paragraph 11(2)(g) of the Canada Deposit Insurance Corporation Act (the “CDIC Act”). Subsection 21(2) of the CDIC Act authorizes the CDIC Board of Directors to make by-laws establishing a system of classifying member institutions into different categories, setting out the criteria or factors CDIC will consider in classifying members into categories, establishing the procedures CDIC will follow in classifying members, and fixing the amount of, or providing a manner of determining the amount of, the annual premium applicable to each category. The CDIC Board of Directors has amended the By-law on January 12 and December 6, 2000, July 26, 2001, March 7, 2002, March 3, 2004, February 9 and April 15, 2005, February 8 and December 6, 2006, December 3, 2008, December 2, 2009, and December 8, 2010.

The CDIC annually reviews this By-law to ensure that it remains up to date. As a result of the review, it was noted that technical amendments need to be made to Schedule 2, Part 2, Reporting Form (Reporting Form) to reflect changes to regulatory forms. The changes are reflected in the proposed By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law (the “Amending By-law”).

The following table provides more detail about the amendments, which are technical in nature:

AMENDING
BY-LAW SECTION(S)

EXPLANATION

Schedule 2, Part 2, Reporting Form

1

Elements 1.1.1 and 1.1.2 of Item 1 — Capital adequacy measures

  • Line references in the Basel II Capital Adequacy Reporting — Credit, Market and Operational Risk (BCAR form) for net on- and off-balance sheet assets, and for total adjusted net tier 1 and adjusted tier 2 capital for purposes of ACM in Schedule 1, have changed.

2

Element 2.1 of Item 2 — Return on risk-weighted assets (%)

  • The title of Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI has changed.
  • Line references in the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI (Income Statement) to net income or loss have changed.

3

Elements 5.1 to 5.3 of Item 5 — Efficiency ratio (%)

  • Title of Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI has changed.

4

Elements of Item 7 — Three-year moving average asset growth (%)

  • References to the CAR forms have been eliminated.
  • Since this element uses four years of asset data, the measure has been modified such that the data is taken from the BCAR form in effect for the specific year. In order to accommodate 2011, a new description needed to be introduced.

5

By-law comes into force on registration.


Alternatives

There are no available alternatives. The CDIC Act specifically provides that the criteria or factors to be taken into account in determining the category in which a member institution is classified and fixing or establishing the method of determining the amount of the annual premium applicable to each category may only be made by by-law.

Benefits and costs

No additional costs should be attributed directly to these changes.

Consultation

As the changes are technical in nature, only consultation through pre-publication in Part Ⅰ of the Canada Gazette is necessary.

Compliance and enforcement

There are no compliance or enforcement issues.

Contact

Sandra Chisholm
Director, Insurance
Canada Deposit Insurance Corporation
50 O’Connor Street, 17th Floor
Ottawa, Ontario
K1P 5W5
Telephone: 613-943-1976
Fax: 613-992-8219
Email: schisholm@cdic.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Board of Directors of the Canada Deposit Insurance Corporation, pursuant to paragraph 11(2)(g) (see footnote a) and subsection 21(2) (see footnote b) of the Canada Deposit Insurance Corporation Act (see footnote c), proposes to make the annexed By-law Amending the Canada Deposit Insurance Corporation Differential Premiums By-law.

Interested persons may make representations concerning the proposed By-law within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice, and be addressed to Sandra Chisholm, Director, Insurance, Canada Deposit Insurance Corporation, 50 O’Connor Street, 17th Floor, Ottawa, Ontario K1P 5W5 (email: schisholm@cdic.ca).

Ottawa, September 26, 2011

MICHÈLE BOURQUE
President and Chief Executive Officer
Canada Deposit Insurance Corporation

BY-LAW AMENDING THE CANADA DEPOSIT INSURANCE
CORPORATION DIFFERENTIAL PREMIUMS BY-LAW

AMENDMENTS

1. Elements 1.1.1 and 1.1.2 of item 1 of the Reporting Form set out in Part 2 of Schedule 2 to the Canada Deposit Insurance Corporation Differential Premiums By-law (see footnote 1) are replaced by the following:

1.1.1 Net On- and Off-Balance Sheet Assets

Indicate the net on- and off-balance sheet assets as set out for item “Q” of Schedule 1 – Ratio and Assets to Capital Multiple Calculations of the BCAR form.

1.1.2 Total Adjusted Net Tier 1 and Adjusted Tier 2 Capital for Purposes of ACM

Indicate the total adjusted net tier 1 and adjusted tier 2 capital for purposes of ACM as set out for item “U” of Schedule 1 – Ratio and Assets to Capital Multiple Calculations of the BCAR form.

2. (1) Paragraph (a) under the heading “Elements” in item 2 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law is replaced by the following:

  • (a) the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI, Reporting Manual, “Income Statement” tab, completed in accordance with that Manual as of the fiscal year ending in the year preceding the filing year; and

(2) Element 2.1 of item 2 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law is replaced by the following:

2.1 Net Income or Loss

The net income or loss attributable to equity holders and non-controlling interests (the latter to be reported as a negative number) is the amount set out in item 33 of the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI.

3. The portion of item 5 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law beginning with the heading “Elements” and ending before the heading “Score” is replaced by the following:

Elements

Use the instructions below to arrive at the elements of the formula.

Refer to the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI, Reporting Manual, “Income Statement” tab, completed in accordance with that Manual for the fiscal year ending in the year preceding the filing year.

5.1 Total Non-Interest Expenses

Indicate the total non-interest expenses, as set out for item 26 of the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI, less any charges for impairment included under items 25(l)(i) and (ii) of that Statement.

5.2 Net Interest Income

Determine the net interest income by adding (a) and (b):

  • (a) Net interest income as set out for item 14 of the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI __________________
  • (b) Taxable equivalent adjustment (if any)  __________________

Total (insert as element 5.2 of the formula)  __________________

5.3 Non-Interest Income

Determine the non-interest income by adding (a) and (b):

  • (a) Non-interest income as set out for item 21 of the Consolidated Statement of Comprehensive Income, Retained Earnings and AOCI __________________
  • (b) Taxable equivalent adjustment (if any)  __________________

Total (insert as element 5.3 of the formula)  __________________

4. The portion of item 7 of the Reporting Form set out in Part 2 of Schedule 2 to the By-law beginning with the heading “Elements” and ending before the heading “Score” is replaced by the following:

Elements

Use the instructions below to arrive at the elements of the formula.

Refer to Section I of the Consolidated Monthly Balance Sheet, Reporting Manual, “Balance Sheet” tab, completed in accordance with that Manual as of the end of the fiscal year indicated under the heading “Assets for Years 1 to 4” below and to the Basel II Capital Adequacy Reporting – Credit, Market and Operational Risk (BCAR) form, completed in accordance with Guideline A-1 of the Guidelines as of the end of the fiscal year indicated under the heading “Assets for Years 1 to 4” below.

Assets for Years 1 to 4

For fiscal years ending in 2008, the total of

  • (a) the amount of net on- and off-balance sheet assets set out for item “N” of Schedule 1 – Ratio and Assets to Capital Multiple Calculations of the BCAR form;
  • (b) the total of the amounts set out in the column “Total” for items 3(a)(i)(A)(I) to (IX) (Securitized Assets – Unrecognized – Institution’s own assets – Traditional securitizations) of Section I – Memo Items of the Consolidated Monthly Balance Sheet; and
  • (c) if applicable, the value of assets, acquired by the member institution in the fiscal year ending in the year preceding the filing year as a result of a merger or acquisition referred to in the fourth paragraph under the heading “THREE-YEAR MOVING AVERAGE ASSET GROWTH (%)”, for years 1, 2 and 3 below, where the value of those assets on the date of their acquisition exceeds 10% of the value of the consolidated assets of the member institution immediately before that merger or acquisition.

For fiscal years ending in 2009, the total of

  • (a) the amount of net on- and off-balance sheet assets set out for item “O” of Schedule 1 – Ratio and Assets to Capital Multiple Calculations of the BCAR form;
  • (b) the total of the amounts set out in the column “Total” for items 2(a)(i)(A)(I) to (IX) (Securitized Assets – Unrecognized – Institution’s own assets – Traditional securitizations) of Section I – Memo Items of the Consolidated Monthly Balance Sheet; and
    (c) if applicable, the value of assets, acquired by the member institution in the fiscal year ending in the year preceding the filing year as a result of a merger or acquisition referred to in the fourth paragraph under the heading “THREE-YEAR MOVING AVERAGE ASSET GROWTH (%)”, for years 1, 2 and 3 below, where the value of those assets on the date of their acquisition exceeds 10% of the value of the consolidated assets of the member institution immediately before that merger or acquisition.

For fiscal years ending in 2010, the total of

  • (a) the amount of net on- and off-balance sheet assets set out for item “O” of Schedule 1 – Ratio and Assets to Capital Multiple Calculations of the BCAR form;
  • (b) the total of the amounts set out in the column “Total” for items 1(a)(i)(A)(I) to (IX) (Securitized Assets – Unrecognized – Institution’s own assets – Traditional securitizations) of Section I – Memo Items of the Consolidated Monthly Balance Sheet; and
  • (c) if applicable, the value of assets, acquired by the member institution in the fiscal year ending in the year preceding the filing year as a result of a merger or acquisition referred to in the fourth paragraph under the heading “THREE-YEAR MOVING AVERAGE ASSET GROWTH (%)”, for years 1, 2 and 3 below, where the value of those assets on the date of their acquisition exceeds 10% of the value of the consolidated assets of the member institution immediately before that merger or acquisition.

For fiscal years ending in 2011 or later, the total of

  • (a) the amount of net on- and off-balance sheet assets set out for item “Q” of Schedule 1 – Ratio and Assets to Capital Multiple Calculations of the BCAR form;
  • (b) the total of the amounts set out in the column “Total” for items 1(a)(i)(A)(I) to (IX) (Securitized Assets – Unrecognized – Institution’s own assets – Traditional securitizations) of Section I – Memo Items of the Consolidated Monthly Balance Sheet; and
  • (c) if applicable, the value of assets, acquired by the member institution in the fiscal year ending in the year preceding the filing year as a result of a merger or acquisition referred to in the fourth paragraph under the heading “THREE-YEAR MOVING AVERAGE ASSET GROWTH (%)”, for years 1, 2 and 3 below, where the value of those assets on the date of their acquisition exceeds 10% of the value of the consolidated assets of the member institution immediately before that merger or acquisition.

Year 1: as of the end of the fiscal year ending in the fourth year preceding the filing year

7.1__________

Year 2: as of the end of the fiscal year ending in the third year preceding the filing year

7.2__________

Year 3: as of the end of the fiscal year ending in the second year preceding the filing year

7.3__________

Year 4: as of the end of the fiscal year ending in the first year preceding the filing year

7.4__________

Indicate the number of fiscal years consisting of at least 12 months that the member institution has been operating as a member institution (if less than six).

______________

A member institution must report assets for the last four fiscal years.

If a member institution has been operating as a member institution for less than four fiscal years of at least 12 months each and it is a member institution formed by an amalgamation involving only one member institution, it must report the assets of the amalgamating member institution for the four fiscal years or less preceding the amalgamation, as applicable.

If a member institution has been operating as a member institution for less than four fiscal years consisting of at least 12 months each, it must indicate “N/A” (“not applicable”) for the elements corresponding to the fiscal years for which it was not operating as a member institution.

COMING INTO FORCE

5. This By-law comes into force on the day on which it is registered.

[42-1-o]