Peruvian Economy and Scotiabank Global Banking and Markets
Overview of Canadian Bail-in Regulations
Compensation Regime
• No creditor worse off: Creditors and
shareholders are compensated where they
have been made worse off than they would
have been in a liquidation
• Persons who hold the following claims at the
time of entry into resolution are entitled to
compensation:
o Shares of the institution
○ Subordinated debt vested in CDIC at the time of entry into
resolution
。 NVCC subordinated debt subsequently converted into
common shares pursuant to contractual terms
Liabilities subsequently converted into common shares
pursuant to Bail-in power
○ Any liability of the institution if the institution was wound-up
at the end of the resolution process
○ Any liability of the institution that was assumed by a
CDIC-owned work-out company or bridge bank which was
subsequently liquidated or wound-up
• Compensation = liquidation value -
resolution value
• Right to compensation is not transferrable
Resolution Tools
CDIC has a number of tools to assist or
resolve a failing DSIB
1. Liquidation of the bank and reimbursement of insured
deposits
2. Bank is placed under temporary CDIC control to
complete its sale to a willing buyer (forced sale) via one
of two approaches:
All shares are transferred to CDIC and it becomes
the sole shareholder to facilitate the sale; or
CDIC is appointed receiver to sell all or some of the
assets and liabilities to the buyer
Under both approaches, critical banking operations
are maintained
3. Bank is placed under temporary CDIC control and CDIC
transfers certain functions to a bridge bank which is
temporarily owned by CDIC
о
Meant to bridge the gap from when an institution
fails and when a buyer or private-sector solution can
be found
Critical banking operations are maintained
4. Bail-in regime
Scotiabank®
58View entire presentation