What Happens in a Failure

Resolution Tools for D-SIBs

Resolution Tool Description Legislation
Enhanced Financial Institution Restructuring Powers (E-FIRP) CDIC may assume temporary control of a D-SIB to stabilize and restructure its operations, and to help restore the institution to viability and maintain public confidence. This tool gives CDIC the ability to convert prescribed D-SIB liabilities into equity through the bail-in process. More information on E-FIRP. CDIC Act s. 39.13(1)(a), (b), 39.13(1.3)
Bail-in Bail-in is the process of converting certain classes of preferred shares and unsecured debt into equity. CDIC must request an order from the Governor in Council (GiC) in order to initiate the bail-in process following an opinion of non-viability by OSFI. Bank customers’ deposits are not bailed-in and this resolution tool doesn’t reduce the deposit protection offered by CDIC. More information on Bail-in. CDIC Act s. 39.13(1)(d)
Bridge Bank The Minister of Finance can create a new bank (called a “bridge bank”) temporarily owned by CDIC. Selected assets and critical services from the failing institution are transferred to the bridge bank, in which CDIC maintains core services of the D-SIB for up to five years after which point the institution is returned to the private sector or wound down. At a minimum, all insured deposits would be transferred to the bridge bank. More information on Bridge Bank. CDIC Act s. 39.13(1)(c)

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