OSFI’s Interim Appendix to Guideline A-2 (Banks/T&L;/Life) sets out the primary considerations and conditions for recognizing an innovative instrument in Tier 1 capital.

Among other things, the Interim Appendix requires that a Special Purpose Vehicle (SPV) issuing innovative instruments be consolidated with the federally regulated financial institution (FRFI) for those instruments to be recognized as Tier 1 capital of the FRFI. Although the final determination has not been made, AcG 15 may affect the ability of FRFIs to consolidate the SPVs in innovative structures that have been accepted in the Canadian marketplace. Accordingly, OSFI has decided to issue an Advisory to provide clarity regarding its intended approach to the recognition of those innovative structures going forward.

The Advisory is available in English and French on OSFI’s Internet Web site (http://www.osfi-bsif.gc.ca) under the Publications section. It may also be obtained by contacting Mr. Stéphane Dupel, General Services Division, by e-mail at extcomm@osfi-bsif.gc.ca or by facsimile at (613) 952-8219.

Questions regarding the Advisory should be addressed to Mr. Paul Melaschenko, Capital Division, at (613) 990-6429, by facsimile at (613) 991-6822 or by e-mail at paul.melaschenko@osfi-bsif.gc.ca.