Enclosed are copies of the final version of a new OSFI guideline entitled “Effective Corporate Governance in Federally Regulated Financial Institutions”. This document represents the culmination of a comprehensive review by OSFI of its approach to assessing the effectiveness of corporate governance practices in federally regulated financial institutions.

As part of its supervisory process, OSFI is increasing the focus on assessing governance in the institutions that it supervises. The release of this guidance also reflects a desire on OSFI’s part to be more transparent concerning its expectations of governance structures and processes, and to provide this information in a streamlined format. The guideline refers to, and builds on, the ratings criteria recently released by OSFI.

The guideline is focussed on issues of particular relevance for financial institutions, rather than on duplicating the considerable guidance that is available from many sources on the responsibilities of boards of directors and corporate governance more generally.

The guideline applies to all federally regulated financial institutions, other than branch operations of foreign banks and foreign insurance companies. At the same time, consistent with the manner in which the OSFI ratings criteria are being applied, the Principal Officer or Chief Agent of branch operations should be aware of this guidance, given their responsibility for matters of corporate governance.

Continued focus and improvement in the areas outlined in the attached material are even more important in today’s challenging environment. Accordingly, I am asking that you provide the board of directors of your institution with a copy of this guideline. Copies are enclosed for this purpose.

If additional copies are required in future, please contact our Publications Division as follows:

Publications Distribution 255 Albert Street, 13th floor, Ottawa, ON CANADA K1A 0H2 Telephone: (613) 990-7655 Fax: (613) 952-8219 E-mail: extcomm@osfi-bsif.gc.ca

In addition, the guideline and this covering letter have been posted to OSFI’s Web site (www.osfi-bsif.gc.ca); please refer to the “What’s New” page of the site.

Please don’t hesitate to contact Julie Dickson, Assistant Superintendent, Regulation Sector, or Patty Evanoff, Senior Director, Legislation and Precedents Division, should you have any questions. Our Ottawa office number is (613) 990-7788.