Quebec's AMF announces additional measures in response to covid-19
On March 31, 2020, the Autorité des marchés 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 announcedby 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 identified. The 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 Québec 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 plan updates.
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 reforms.
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 level.
QUEBEC-CHARTERED INSURERS
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.