Capital treatment of Canada’s Highly Affected Sectors Credit Availability Program
The Office of the Superintendent of Financial Institutions (OSFI) has issued direction on capital treatment of the recently launched Highly Affected Sectors Credit Availability Program (HASCAP).
Federally regulated lenders are to treat HASCAP loans as a sovereign exposure based on the Business Development Bank of Canada (BDC) guarantee. They are to apply the relevant risk weight under OSFI’s Capital Adequacy Requirements (CAR) guideline.
In calculating the leverage ratio, lenders are to include the entire amount of the loan in the exposure measure of the leverage ratio pursuant to the Leverage Requirements Guideline paragraph 12.
Through HASCAP, the BDC will work with participating Canadian financial institutions to offer government-guaranteed, low-interest loans of up to $1 million.
Further details are available here.
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