CIBC Q1 2019 Fixed Income Investor Presentation
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Domestic Stability Buffer
Background
Canadian Domestic Systemically Important Banks (D-SIBS) are required to hold Pillar 2 capital buffer that is privately
communicated to each bank, to address risks that are inadequately captured by the Pillar 1 minimum capital requirements
D-SIBS are subject to publicly-disclosed Pillar 1 minimum of 8.0% and undisclosed non-public Pillar 2 buffer
What Has Changed
OSFI announced on June 20th a revised framework where a component of the Pillar 2 buffer for D-SIBS will be publicly
disclosed(1)
This Domestic Stability Buffer is currently set at 1.5% of RWA (1.75% effective April 30, 2019), but could range between 0%
to 2.5% depending on OSFI's assessment of systemic vulnerabilities D-SIBS face including Canadian consumer and
institutional indebtedness, as well as asset imbalances in the Canadian market
The purpose of public disclosure is to provide greater transparency to
the market and other stakeholders, and to enhance the usability of the
buffer by the banks in times of stress
A breach would require a remediation plan from the bank
OSFI will undertake a review of the buffer on a semi-annual basis, in
June and December with any changes being made public
Implications for Banks
There is no incremental capital requirement for banks. This is a
transition of the Pillar 2 capital buffer requirement from private to
public domain.
Given CIBC (and other Canadian D-SIBS) are well above the minimum
requirement, we do not believe this will impact banks' capital planning
in a material way
(1) There may be an additional private component to Pillar 2 buffer specific to individual banks
(2) The Domestic Stability Buffer will be increased to 1.75% of RWA effective April 30, 2019
Current
1.5%
Domestic
11.2%
Stability
Buffer(2)
Pillar 1
Minimum
8.0%
for D-SIBS*
OSFI
Requirement
CIBC
(Q1/19)
* Consists of 4.5% minimum plus 2.5% of capital
conservation buffer plus 1.0% current D-SIB surchargeView entire presentation