Reference: Guidance Note for Banks/T&L;
Our File: P2215-2

June 20, 2000

Subject: Capital Instruments

OSFI’s Guideline A, Capital Adequacy Requirements, sets out the primary considerations for defining the capital of an institution for purposes of measuring capital adequacy. As a result of recent enquiries, OSFI is issuing a guidance note which modifies and clarifies OSFI’s position regarding the acceptability of certain features pertaining to Tier 1 preferred shares and Tier 2a hybrid instruments. It also sets out OSFI’s position on including innovative instruments in Tier 2. The guidance note comes into effect immediately. OSFI plans to incorporate this guidance note in the next revision of the Capital Adequacy Requirements Guideline.

This guidance note is available in English and French on OSFI’s Internet web site (http://www.osfi-bsif.gc.ca) under the Publications section. It can 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 guidance note should be addressed to Mr. Silvano Tittonel, Capital Division, at (613) 990-6429 or by facsimile at (613) 998-8466.

Michael Hafeman
Assistant Superintendent
Specialist Support Sector