Overview of Canadian Bail-in Regulations
Bail-in Process
Business
as usual
Good
financial
health
Resolution
Bail-in Conversion
Heightened
risk
Financial difficulties
⚫ DSIB may
implement recovery
plan actions under
OSFI oversight
• CDIC may monitor
and undertake
necessary
preparatory
activities
⚫ DSIB may
experience declining
market confidence,
credit rating
downgrades and
funding / capital
raising challenges
Point of
non-viability
• OSFI declares
the DSIB non-
viable
• Minister of
Finance has
Federal Cabinet
issue orders
authorizing
CDIC to assume
temporary
control or
ownership of the
DSIB and to
execute a Bail-in
conversion
•
Resolution
weekend
CDIC takes
control /
ownership of
the DSIB
• OSFI triggers
NVCC
conversion
•
Management
and Board of
DSIB
replaced if
necessary
Stabilization /
restructuring
CDIC
exits
• 1-week to 1-
year timeframe
•
Common
shares resulting
from NVCC and
BID conversion
are issued
(voting rights
suspended)
Execution of
restructuring
plan
Liquidity
support if
necessary
• 1 to 5-year
timeframe
•
Voting rights are
resumed
⚫ "No creditor
worse off"
determination
and payment of
compensation
Scotiabank®
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