Vol. 148, No. 7 — March 26, 2014

Registration

SOR/2014-45 March 6, 2014

CANADA DEPOSIT INSURANCE CORPORATION ACT

By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law

The Board of Directors of the Canada Deposit Insurance Corporation, pursuant to paragraph 11(2)(g) (see footnote a) and subsection 18(3) (see footnote b) of the Canada Deposit Insurance Corporation Act (see footnote c), makes the annexed By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law.

Ottawa, March 5, 2014

BY-LAW AMENDING THE CANADA DEPOSIT INSURANCE CORPORATION DEPOSIT INSURANCE POLICY BY-LAW

AMENDMENTS

1. Subsection 2(1) of the schedule to the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law (see footnote 1) is amended by adding the following in alphabetical order:

“group entity” means, in respect of a member institution,

• (a) an entity in which the member institution or any of its subsidiaries or affiliates holds, directly or indirectly, an ownership interest of 10 % or more, or
• (b) a business enterprise that the member institution or any of its subsidiaries or affiliates operates with other persons for profit, including a joint venture or a special purpose vehicle; (entité du groupe)

“resolution” means the exercise by the Corporation of its powers under the Act for the purpose of resolving financial or other difficulties of a member institution; (règlement)

“resolution plan” means a plan prepared for the purpose of implementing, in whole or in part, a resolution in respect of a member institution; (plan de règlement)

2. (1) Paragraph 15(1)(c) of the schedule to the By-law is replaced by the following:

• (c) a current list of each of its directors and officers and their titles or offices, together with their business addresses, including email addresses, and their business telephone numbers.

(2) Subsection 15(2) of the schedule to the By-law is replaced by the following:

(2) The member institution shall, if requested by the Corporation, provide to the Corporation a current list of its directors and officers and those of its subsidiaries, affiliates and group entities, and their titles or offices, together with their business addresses, including email addresses, and their business and personal telephone numbers, not later than 30 days after the day on which the request is received.

3. (1) Paragraph 16(a) of the schedule to the By-law is replaced by the following:

• (a) without delay, financial statements of the member institution or of any of its subsidiaries, for the period specified, prepared on a consolidated or unconsolidated basis and including a balance sheet for each of its foreign branches, if any;

(2) Paragraph 16(d) of the schedule to the By-law is replaced by the following:

• (d) without delay, any other reports, documents and information specified in the request that pertain to its affairs and those of its subsidiaries, affiliates and group entities, or to the affairs of any other financial institution or any other entity with which the member institution has a relationship.

4. The schedule to the By-law is amended by adding the following after section 16:

16.1 (1) A member institution shall, if requested to do so by the Corporation for the purpose of developing and maintaining a resolution plan for the member institution, provide to the Corporation, within the time specified in the request, any of the following information that is specified in the request:

• (a) audited financial statements — or if they are not available, unaudited financial statements — for the period specified in the request on a consolidated and unconsolidated basis for the member institution and its subsidiaries, affiliates and group entities that include a balance sheet for each of its foreign branches, if any;
• (b) a current list of each subsidiary, affiliate and group entity of the member institution identifying its jurisdiction of incorporation and describing its licence or licences, as applicable, to carry on business including restrictions, if any, and its applicable regulatory authority together with, if known, the name, title, address, telephone number and email address of a contact person at the regulatory authority;
• (c) a current list of each of the directors and officers of its subsidiaries, affiliates and group entities, and their titles or offices, together with their business addresses, including email addresses, and their business and personal telephone numbers;
• (d) the legal corporate structure of the member institution, identifying its subsidiaries, affiliates and group entities, including information about the ownership of each of those subsidiaries, affiliates and group entities;
• (e) the financial connections between the member institution and its subsidiaries, affiliates and group entities, including intra-group exposures, guarantees, cross-group funding arrangements, cross-default clauses, liquidity support and capital support;
• (f) detailed information about the payment, clearing and settlement systems that support the operations of the member institution and its subsidiaries, affiliates and group entities;
• (g) detailed information about the business functions and business operations of the member institution and of its subsidiaries, affiliates and group entities, as well as the manner and extent to which those functions and operations are performed by the entities for each other or, if applicable, performed for those entities by external service providers;
• (h) the business continuity or crisis management plans of the member institution and its subsidiaries, affiliates and group entities, together with related communication and employee retention plans;
• (i) detailed information about both on- and off-balance sheet assets, liabilities, derivatives and commitments of the member institution, its subsidiaries, affiliates and group entities;
• (j) detailed information about the legal and regulatory framework applicable to the member institution and its subsidiaries, affiliates and group entities; and
• (k) any other reports, documents or information pertaining to the affairs of the member institution or to those of its subsidiaries, affiliates or group entities that relate to the resolution plan for the member institution.
  

(2) A member institution shall, if requested to do so by the Corporation for the purpose referred to in subsection (1), provide to the Corporation, within the time specified in the request, an analysis in respect of any of the information referred to in paragraphs (1)(a) to (k) that is specified in the request.

16.2 Despite sections 15, 16 and 16.1, a member institution is not required to provide to the Corporation any information referred to in those sections if it is prohibited from doing so by Canadian legislation or by the legislation of a jurisdiction outside Canada.

COMING INTO FORCE

5. This By-law comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the By-law.)

Description

The Board of Directors of the Canada Deposit Insurance Corporation (CDIC) made the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law (By-law) on October 27, 1993, pursuant to subsection 18(3) and paragraph 11(2)(g) of the Canada Deposit Insurance Corporation Act (the CDIC Act). Subsection 18(3) of the CDIC Act provides that a policy of deposit insurance shall contain such provisions as may be prescribed by the by-laws, and paragraph 11(2)(g) provides that the CDIC Board of Directors may make by-laws prescribing anything that by virtue of any provision of the CDIC Act is to be prescribed by the by-laws. The By-law prescribes the terms and conditions of the policy of deposit insurance of every CDIC member. The CDIC Board of Directors subsequently amended the By-law on March 3, 1999, March 7, 2002, April 12, 2005, and October 8, 2008.

The 2011 Financial Stability Board’s Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes) provide that jurisdictions should put in place an ongoing process for recovery and resolution planning covering at a minimum domestically incorporated firms that could be systemically significant or critical if they fail (domestic systemically important banks — D-SIBs). CDIC is responsible for ensuring that the resolution plans are developed, in place and are kept up to date. The By-law Amending the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law (the Amending By-law) was made by the CDIC Board of Directors on March 5, 2014. The Amending By-law requires member institutions to provide CDIC with information and analysis, both on an annual basis and on a request basis, to facilitate resolution planning by CDIC.

The following table provides detail about the amendments and highlights the differences between the Amending By-law and the proposed Amending By-law prepublished on October 26, 2013, in Part I of the Canada Gazette:

AMENDING BY-LAW	BY-LAW	EXPLANATION
Section 1	Section 2(1)	Adds definitions for: "group entity", "resolution" and "resolution plan" (Change from prepublication: the definition of group entity has been revised to include a 10% ownership threshold).
Section 2	Section 15	Paragraph 15(1)(c): Subsection 15(1) sets out information that must be provided annually to CDIC. The amendment to paragraph 15(1)(c) clarifies that each member institution must annually provide a list of its directors and officers together with their title or office, their business address, business email address and business telephone number. Subsection 15(2): The amended subsection 15(2) provides that, when requested to do so by CDIC, the same information as stipulated in paragraph 15(1)(c) is to be provided about the member institution’s subsidiaries, affiliates and group entities and includes the personal telephone number of the officers and directors. The current provision refers only to affiliates. (Change from prepublication: subsection 15(2) has been revised to make it clear that the member institution itself must also provide personal telephone numbers of its officers and directors when requested to do so.)
Section 3	Section 16	Without limiting the generality of CDIC’s ability to request information, section 16 sets out the type of information that may be requested by CDIC in furtherance of its objects. Paragraph 16(a) refers to financial statements. The amendment adds to the subsection: "balance sheet information about each of the institution’s foreign branches, if any." Paragraph 16(d) refers to information generally: The current provision references information about the member, its subsidiaries and affiliates. The amendment introduces group entities.
Section 4	Section 16.1	New section 16.1: Subsection 16.1(1) provides that if requested to do so by CDIC for the purpose of developing and maintaining a resolution plan for the member institution, the member institution shall provide the information in the request. Paragraphs 16.1(1)(a) to (k) set out examples of the type of information that may be included in such requests. Subsection 16.1(2) provides that a member institution shall provide analysis if requested about any of the information requested under subsection 16.1(1). New section 16.2: This section makes it clear that notwithstanding CDIC’s authority to ask for information and analysis under sections 15, 16 or 16.1, member institutions are not required to provide information if they are statutorily prohibited from doing so. (This is a new provision.)
Section 12		Comes into force on the day of registration.

Alternatives

There are no available alternatives. The amendments must be done by way of by-law.

Benefits and costs

The Amending By-law ensures that the policy of deposit insurance for each member institution contains a specific obligation for member institutions to respond to resolution planning information requests. No significant costs should be attributed directly to these changes.

Consultation

Member institutions were directly informed of the proposed amendments by letter of September 5, 2013. Prepublication in Part I of the Canada Gazette took place on October 26, 2013, providing for a 90-day comment period. CDIC met with the Canadian Bankers Association (CBA) regarding the proposed amendments on December 18, 2013, and written comments from the CBA were received on January 24, 2014. Changes were made to Sections 1, 2 and 4 of the Amending By-law in response to comments received. No other changes were deemed necessary as a result of the comments received.

Compliance and enforcement

There are no compliance or enforcement issues.

Contact

Sheila Salloum
Director
Insurance
Canada Deposit Insurance Corporation
50 O’Connor Street, 17th Floor
K1P 6L2
Telephone: 613-947-0257
Fax: 613-992-8219
Email: ssalloum@cdic.ca

• Footnote a
  R.S., c. 18 (3rd Supp.), s. 51
• Footnote b
  S.C. 2007, c. 6, s. 405
• Footnote c
  R.S., c. C-3
• Footnote 1
  SOR/93-516; SOR/2008-293, s. 1