Investor Presentaiton
Domestic Stability Buffer
CIBC
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
The Domestic Stability Buffer was decreased to 1.00% of RWA effective March 13, 2020 (buffer will not increase for at least 18 months; this was re-confirmed by
OSFI on December 8, 2020), 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
OSFI announced on June 20, 2018 a revised framework where a component of the Pillar 2 buffer for D-SIBS will be publicly disclosed (1)
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
Current
Domestic
Stability
Buffer(2)
12.1%
1.00%
Pillar 1
Minimum
8.0%
for D-SIBS*
1. There may be an additional private component to Pillar 2 buffer specific to individual banks
2. The Domestic Stability Buffer was originally set at 1.5% when introduced
OSFI Target
CIBC
(Q4/20)
* Consists of 4.5% minimum plus 2.5% of capital
conservation buffer plus 1.0% current D-SIB surcharge
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