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On March 31, 2020, the Autorite des marches
financiers (AMF) announced new measures aimed at minimizing the impact of
COVID-19 on Quebec’s financial system. These measures are in
addition to or are intended to clarify the measures
announced by the AMF on March 19, 2020, and will impact
the following sectors of financial activity:
Financial services cooperatives, trust companies and savings
companies (read more)
Deposit-taking institutions authorized under the Deposit
Institutions and Deposit Protection Act (read more)
Quebec-chartered insurers (read more)
Many of the measures announced by AMF echo the actions taken by
the Office of the Superintendent of Financial Institutions (OSFI)
in late March. For more information, please see our March 2020
Blakes Bulletin: OSFI Announces Further Actions in
Response to COVID-19.
DEPOSIT AND TRUST INSTITUTIONS
Following the relief measures announced by OSFI, the key
announcements in AMF’s guidance for deposit and trust
institutions included the following:
Payment Deferrals: Loans for which financial
institutions are offering payment deferrals may continue to be
treated as performing loans for regulatory purposes if the
institution deems that such loans, if they were not in default at
the time the deferral took effect, would have been performing
loans. AMF also asks that non-performing loans in deferral be
deferral on student loans announced by the Government
of Quebec on March 27, 2020, will also benefit from this capital
treatment. This temporary measure will remain in place for an
initial period of six months.
IFRS 9: AMF is offering the same guidance as
OSFI on the application of IFRS 9 in these exceptional
circumstances, stressing the importance of experienced credit
judgment and the use of forward-looking information.
Capital Treatment for Government Programs: AMF
is following OSFI’s guidance with respect to the capital
treatment of exposures in connection with the COVID-19 Canadian
government assistance programs, including the Canada Emergency
Business Account, the new EDC Loan Guarantee for Small and Medium
Enterprises and the new BDC Co-Lending Program for Small and Medium
Enterprises. As part of Quebec’s implementation of the
Concerted Temporary Action Program for Businesses (CTAPB), the
exposure with respect to loans taken on under the CTAPB and
guaranteed by Investissement Quebec may be treated by
financial institutions as a sovereign exposure for the portion of
the loan backed by the guarantee and the remaining portion being
considered as exposure to the borrower.
Supervision: AMF’s supervision activities
will be adjusted for the period of the COVID-19 crisis in order to
take into account the situation of affected financial institutions.
This includes following OSFI in raising the issue-limit
requirements for covered bonds and deferring submission of recovery
Liquidity Requirements: In line with OSFI, AMF
provided guidance related to the minimum short-term liquidity
requirement and announced flexibility for the treatment of the net
stable funding ratio for assets encumbered as part of the Bank of
Canada’s liquidity operations during stress periods.
Minimum Requirements and Internal Targets: AMF
may, on a case-by-case basis, allow financial institutions to
operate at different thresholds than normally permitted by their
internal targets and the minimum requirements mandated by AMF. In
order to do so, financial institutions must submit a request for
authorization to AMF, providing support for it.
Basel III Reforms: AMF is following OSFI in
delaying the implementation of the final stage of Basel III
DEPOSIT INSTITUTIONS AND DEPOSIT PROTECTION ACT
AMF is implementing relief measures in respect of certain
provisions of the Deposit Institutions and Deposit Protection
Act. The specific regulatory and administrative relief
measure announced by AMF include the following:
Deposit Insurance Premiums: For the 2020
account period for premiums only, AMF will allow the first premium
instalment due on July 15, 2020, to be deferred until December 15,
2020. No interest or penalty will be charged to institutions that
wish to defer the first instalment and pay the entire premium on
December 15, 2020.
Declaration of Guaranteed Deposits: AMF may, on
a case-by-case basis, provide relief to institutions that find it
difficult to file their Declaration of Guaranteed Deposits by July
15, 2020. Relief measures may include accepting a partially
completed declaration or allowing guaranteed deposits to be
declared after the deadline. In all cases, guaranteed deposits must
be declared by no later than December 15, 2020.
Deposit Protection Information: The new
Regulation respecting the application of the Deposit Protection
Act that was scheduled to come into force on April 30, 2020,
introduces changes to deposit protection and requires institutions
to inform depositors about deposit protection. Given the difficulty
in adjusting current practices or updating websites and other
documentation to reflect these changes, AMF expects
Quebec-chartered institutions to comply with the new rules on a
best-effort basis. The provisions for electronically displaying the
official AMF authorization logo will not come into force until
April 30, 2021.
Data Requirements 2.0: AMF is postponing
compliance testing of data requirements 2.0 until next fall and may
limit the scope of testing.
Data Requirements 3.0: Since the Canada Deposit
Insurance Corporation (CDIC) is working with the federal Department
of Finance to postpone the implementation of its own data
requirements 3.0, AMF will also postpone implementation in order to
harmonize with the new date that will be determined at the federal
Following its March 19, 2020, decision to immediately suspend
surveys and other public consultations related to insurance
regulations and guidelines, AMF announced the cancellation or
postponement of several specific consultations and studies in
connection with activities related to IFRS 17 or capital
requirements. Insurers and market participants will be notified as
soon as possible once these activities resume.
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(C) 2020 Blake, Cassels & Graydon LLP.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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