Regulatory Capital (Banks) Regulations (SOR/92-531)

Short Title

1 These Regulations may be cited as the Regulatory Capital (Banks) Regulations.

Interpretation

2 In these Regulations,

Act

Act means the Bank Act; (Loi)

designated entity

designated entity means an entity other than

• (a) an insurance company,

• (b) a securities dealer, or

• (c) an entity controlled by an insurance company or a securities dealer; (entité désignée)

insurance company

insurance company means an insurance company that is incorporated by or under the laws of Canada or of a province; (société d’assurances)

minority interest

minority interest means an equity interest, in an entity that is controlled by a bank, that is held by a person other than

• (a) the bank, or

• (b) an entity controlled by the bank; (participation minoritaire)

securities dealer

securities dealer means an entity described in paragraph (g) of the definition financial institution in section 2 of the Act. (négociant en valeurs mobilières)

Regulatory Capital

• 3 (1) Subject to subsection (2) and section 4, the regulatory capital of a bank, at a particular time, is the aggregate of the amounts of

  • (a) shareholders equity,

  • (a.1) members’ equity, if the bank is a federal credit union,

  • (b) minority interests, and

  • (c) subordinated indebtedness

  that would be reported in the financial statements of the bank prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 308(4) of the Act, less the amount of goodwill that would be included in those financial statements.

• (2) In calculating the amount of regulatory capital under subsection (1), an amount may be included in respect of a security or membership share only if

  • (a) the security or membership share is, by its terms, subordinate in right of payment to all deposit liabilities and all other liabilities of the entity that issued the security or membership share other than liabilities that, by their terms, rank equally with, or are subordinate to, that security or membership share;

  • (b) the security or membership share is issued and fully paid-up; and

  • (c) in respect of subordinated indebtedness or a preferred share, the security

    • (i) has an initial minimum term of five years or more or has no term, and

    • (ii) cannot be redeemed or purchased for cancellation in the first five years after it is issued.

• 4 (1) For the purposes of sections 476 to 478 of the Act, the regulatory capital of a bank is the amount calculated under section 3, less the aggregate of

  • (a) the amounts of shareholders’ equity and subordinated indebtedness of an insurance company or securities dealer controlled by the bank, or an entity controlled by such an insurance company or securities dealer, that are included in the amount of regulatory capital of the bank calculated pursuant to section 3,

  • (b) the amount of investments, other than shareholders’ equity or subordinated indebtedness referred to in paragraph (a), of the bank or a designated entity controlled by the bank in an insurance company or securities dealer controlled by the bank, or in an entity controlled by such an insurance company or securities dealer, where the investments are part of the capital of the insurance company or securities dealer, and

  • (c) the amount of loans, other than subordinated indebtedness referred to in paragraph (a), made by the bank or by a designated entity controlled by the bank to an insurance company or securities dealer controlled by the bank, or to an entity controlled by such an insurance company or securities dealer, where the loans are part of the capital of the insurance company or securities dealer, and

  • (d) the amount of a minority interest in an insurance company or securities dealer controlled by the bank, or in an entity controlled by such an insurance company or securities dealer, that is included in the amount of regulatory capital of the bank calculated pursuant to section 3.

• (2) For the purposes of paragraphs (1)(b) and (c), capital means

  • (a) in respect of an insurance company to which the Insurance Companies Act applies, regulatory capital within the meaning of the Regulatory Capital (Insurance Companies) Regulations; and

  • (b) in respect of any other insurance company or a securities dealer, an amount that would be treated as capital by a regulatory body that regulates that insurance company or securities dealer.