CDIC, as the Resolution Authority for its member institutions, has been working with Canada’s domestic systemically important banks (DSIBs) over the past few years on developing resolution plans which describe how DSIBs, in the unlikely event of failure, could be resolved in an orderly manner, while ensuring the continuity of critical financial services.
Amendments to the CDIC Act were made in June 2017 to provide a statutory framework that formalizes the ongoing development, submission, and maintenance of resolution plans by DSIBs. Since then CDIC has been developing the Resolution Planning By-law in consultation with the DSIBs. Consultations in the Canada Gazette took place on February 2, 2019, and CDIC anticipates that the By-law will come into force shortly.
The framework sets out a process to advise the DSIBs of deficiencies in their resolution plans and the requirement that DSIBs take the actions necessary to address those deficiencies. It is complemented by amendments to the Differential Premiums By-law, which incentivizes DSIBs to meet CDIC’s resolution planning expectations by introducing a premium adjustment for DSIBs whose plans are assessed as partially non-compliant or materially non-compliant as defined under the new bylaw.