Canada Deposit Insurance Corporation Resolution Planning By-law (SOR/2019-138)

The Board of Directors of the Canada Deposit Insurance Corporation, pursuant to paragraph 11(2)(e)Footnote ^a of the Canada Deposit Insurance Corporation ActFootnote ^b, makes the annexed Canada Deposit Insurance Corporation Resolution Planning By-law.

• Return to footnote ^aS.C. 2017, c. 20, s. 109(1)

• Return to footnote ^bR.S., c. C-3

Ottawa, March 6, 2019

The Minister of Finance, pursuant to subsection 11(2.01)Footnote ^c of the Canada Deposit Insurance Corporation ActFootnote ^b, approves the annexed Canada Deposit Insurance Corporation Resolution Planning By-law, made by the Board of Directors of the Canada Deposit Insurance Corporation.

• Return to footnote ^cS.C. 2017, c. 20, s. 109(2)

Ottawa, April 10, 2019

Le ministre des Finances, William Francis Morneau Minister of Finance

• SOR/2019-138, err.(F), Vol. 153, No. 12

Interpretation

Marginal note:Definitions

1 The following definitions apply in this By-law.

Act

Act means the Canada Deposit Insurance Corporation Act. (Loi)

bank group

bank group means a domestic systemically important bank and its affiliates, any entity in which that bank has a substantial investment, as defined in section 2 of the Bank Act, and any business enterprise that that bank operates with other persons, including a joint venture or a special purpose vehicle. (groupe bancaire)

critical function

critical function means an activity that is performed by an entity within a bank group for persons not affiliated with the bank group and whose absence or failure would have an adverse effect on the stability of the financial system or on the functioning of the economy in Canada. (fonction essentielle)

critical shared service

critical shared service means an activity that is performed by an entity within a bank group or an external provider for one or more business units or legal entities of the bank group and whose absence or failure would lead to the cessation of, or present a material risk to the continuity of, critical functions. (service partagé essentiel)

material change

material change means a change in a bank group’s legal structure, business, operations, critical functions, critical shared services or material legal entities, or in the laws and regulations applicable to the bank group, that would require one or more amendments to the bank’s resolution plan. (changement important)

material legal entity

material legal entity means a legal entity or branch within a bank group that meets at least one of the following criteria:

• (a) it performs a critical function or a critical shared service;

• (b) the cessation or disruption of its operations might prevent the implementation of the bank’s resolution strategy; or

• (c) it is a member institution. (entité juridique importante)

resolution

resolution means the exercise by the Corporation of its powers under paragraph 7(d) of the Act, or the exercise of similar powers by an authority in another jurisdiction within or outside Canada. (règlement)

resolution plan

resolution plan means a domestic systemically important bank’s plan for the bank group’s resolution. (plan de règlement)

Submission and Maintenance of a Resolution Plan

Marginal note:Approval

• 2 (1) Any resolution plan submitted to the Corporation by a bank under section 39.01 of the Act must first be approved by the bank’s board of directors or by a delegated committee of the bank’s board of directors, unless otherwise specified by the Corporation.

• Marginal note:Partial plan

  (2) The Corporation may request that a bank submit only a partial resolution plan.

Marginal note:Policies and procedures for updating resolution plan

• 3 (1) The bank must establish policies and procedures that ensure that the resolution plan is maintained, tested, regularly reviewed against the current legal, financial, regulatory and operational characteristics of the bank group and is updated to reflect any material change.

• Marginal note:Copy provided to Corporation

  (2) The bank must provide, on the Corporation’s request, a copy of the policies and procedures referred to in paragraph (1) and a summary of the maintenance and testing activities undertaken by the bank in respect of the resolution plan.

Contents of a Resolution Plan

Marginal note:Contents

4 A resolution plan must contain

• (a) a description of each critical function;

• (b) a description of each critical shared service;

• (c) a description of each material legal entity;

• (d) a resolution strategy that meets the requirements set out in section 5;

• (e) the bank’s assessment of how the bank group’s legal structure, operations and financial arrangements will support the implementation of the resolution strategy;

• (f) the bank’s assessment of how the resolution strategy will minimize reliance on public sector financial assistance and ensure that material legal entitie have access to sufficient loss-absorbing capacity, liquidity and funding during the resolution;

• (g) a list of the bank group’s regulators and a summary of the regulatory requirements applicable to the resolution strategy and a description of how those requirements will be satisfied in a manner that supports implementation of the resolution strategy;

• (h) a list of the bank group’s material contractual arrangements and a description of how the contractual requirements will be met in a manner that supports the implementation of the resolution strategy;

• (i) the bank’s analysis of how the bank group’s governance practices, operational capabilities and information systems will support the implementation of the resolution strategy;

• (j) the bank’s assessment of impediments to the implementation of the resolution strategy, including a summary of the impact of those impediments on the Corporation’s ability to implement the resolution strategy and on the continuity of critical functions; and

• (k) a work plan that describes the planned activities for the maintenance, validation and testing of the resolution plan, including activities to account for any material change and proposes remedial actions and time frames to address deficiencies.

Marginal note:Resolution strategy

5 The resolution strategy must describe

• (a) how the Corporation will carry out the resolution of each member institution in a manner that supports the continuity of critical functions;

• (b) how each material legal entity other than a member institution

  • (i) will continue to operate in a manner that supports the continuity of critical functions;

  • (ii) can be disposed of or wound down without impeding the continuity of critical functions; or

  • (iii) can be placed in an orderly insolvency proceeding or resolved without impeding the continuity of critical functions; and

• (c) how the profile and operations of the bank group can be reduced through divestitures or wound down, with minimal adverse effect on the stability of the financial system in Canada.

Material Change

Marginal note:Notice of material change

6 The bank must notify the Corporation as soon as feasible after the occurrence of a material change.

Marginal note:Material change report

• 7 (1) On receipt of the notification required under section 6, the Corporation may request that the bank provide a material change report, which must include

  • (a) a brief description of the material change;

  • (b) a reference to the sections of the resolution plan affected by the material change; and

  • (c) the bank’s plan and schedule for updating the resolution plan to account for the material change.

• Marginal note:Time limit for providing report

  (2) The bank must provide the material change report within 30 days after the day on which the Corporation makes the request, unless the Corporation has specified a longer period.

Marginal note:Work plan

8 The bank must include, upon request by the Corporation, the plan referred to in paragraph 7(1)(c) in its work plan for the next submission of its resolution plan.

Notice of Compliance and Request for Revised Work Plan

Marginal note:Notice of compliance

9 Following its assessment of the resolution plan, the Corporation must notify the bank in writing whether the resolution plan complies with this By-law.

Marginal note:Particulars of non-compliance

10 If the resolution plan does not comply with this By-law, the Corporation must advise the bank in writing of the deficiencies that resulted in the non-compliance and request that the bank submit a revised work plan.

Marginal note:Revised work plan

• 11 (1) The revised work plan must describe the remedial actions to be taken by the bank to address the relevant deficiencies and the schedule required to complete those actions.

• Marginal note:Approval of revised work plan

  (2) The revised work plan submitted to the Corporation must first be approved by the bank’s board of directors or by a delegated committee of the bank’s board of directors, unless otherwise specified by the Corporation.

• Marginal note:Time limit

  (3) The revised work plan must be submitted in writing to the Corporation within 30 days after the day on which the Corporation makes the request, unless the Corporation has specified a longer period.

• Marginal note:Decision

  (4) On receipt of the revised work plan, the Corporation must determine whether the resolution plan

  • (a) complies with this By-law;

  • (b) is partially non-compliant, meaning that it contains one or more deficiencies that would prevent the implementation of the bank’s resolution strategy but for which an acceptable work plan is being substantially complied with; or

  • (c) is materially non-compliant, meaning that it contains one or more deficiencies for which an acceptable work plan is either not in place or not being substantially complied with.

• Marginal note:Notice

  (5) The Corporation must notify the bank in writing of its decision.

• Marginal note:Subsequent revision to work plan

  (6) Any subsequent revision to the work plan must be agreed to by the Corporation and, unless otherwise specified by the Corporation, must first be approved by the bank’s board of directors or by a delegated committee of the bank’s board of directors.

Coming into Force

Marginal note:S.C. 2017, c. 20

Footnote ^*12 This By-law comes into force on the day on which section 110 of the Budget Implementation Act, 2017, No. 1 comes into force, but if it is registered after that day, it comes into force on the day on which it is registered.

• Return to footnote ^*[Note: By-law in force May 15, 2019.]