Regulatory Alerts2025-09-11
Capital Adequacy Requirements (CAR) Chapter 6 – Securitization
The Office of the Superintendent of Financial Institutions (OSFI) issued this guideline to establish capital treatment and risk-weighted asset calculations for securitization exposures across federally regulated banks, holding companies, trust, and loan entities. Institutions must evaluate transactions based on economic substance and apply one of four capital approaches—SEC-IRBA, SEC-ERBA, SEC-IAA, or SEC-SA—while meeting strict operational and due diligence criteria to recognize risk transfer. The framework mandates specific capital caps, maturity adjustments, credit risk mitigation rules, and specialized treatments for resecuritizations, non-performing loans, and simple transparent comparable structures to ensure accurate regulatory capital determination.