Regulatory Alerts2025-09-11
Capital Adequacy Requirements (CAR) Chapter 2 – Definition of Capital
The Office of the Superintendent of Financial Institutions (OSFI) defines regulatory capital for federally regulated banks, holding companies, and trust and loan firms by establishing strict eligibility criteria across three tiers: Common Equity Tier 1, Additional Tier 1, and Tier 2. Instruments must demonstrate perpetual maturity, subordination to depositors, discretionary distributions, and effective loss-absorption capacity to qualify for inclusion. The framework additionally mandates Non-Viability Contingent Capital features for conversion or write-off, specifies the treatment of minority interests and special purpose vehicles, and prescribes precise regulatory adjustments to capital calculations.
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