Canadian Tire Bank's Regulatory Environment

The Bank manages its capital under guidelines established by the Office of the Superintendent of Financial Institutions of Canada (“OSFI”). OSFI’s regulatory capital guidelines are based on the international Basel Committee on Banking Supervision framework entitled Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems (“Basel III”), which came into effect in Canada on January 1, 2013, and measures capital in relation to credit, market and operational risks. The Bank has various capital policies and procedures and controls, including an Internal Capital Adequacy Assessment Process (“ICAAP”), which it utilizes to achieve its goals and objectives.

The Bank’s objectives include:
  • Providing sufficient capital to maintain the confidence of investors and depositors; and
  • Being an appropriately capitalized institution, as measured internally, defined by regulatory authorities and compared with the Bank’s peers.
The capital and leverage ratios are prescribed on OSFI’s Capital Adequacy Requirements and Leverage Requirement Guidelines. The capital ratios are calculated as regulatory capital divided by risk-weighted assets (“RWA”). The leverage ratio is calculated as Tier 1 capital divided by the leverage ratio exposure.

OSFI’s regulatory capital guidelines under Basel III allow for two tiers of capital. Common Equity Tier 1 (“CET1”) capital includes common shares, retained earnings and accumulated other comprehensive income, less regulatory adjustments which are deducted from capital. The Bank currently does not hold any additional Tier 1 capital instruments, therefore, the Bank’s CET1 is equal to its Tier 1 regulatory capital. Tier 2 capital consists of the eligible portion of general allowances.

Risk-weighted assets (“RWA”) includes a credit risk component for all on- and off-balance sheet assets and financial instruments; an operational risk component based on a percentage of average risk-weighted revenues, and a market risk component for assets held for trade. For the purposes of calculating RWA, securitization transactions are considered off-balance sheet transactions and therefore securitization assets are not included in the RWA calculation. 

As at December 31, 2019 and 2018, the Bank complied with all regulatory capital guidelines established by OSFI and its internal targets as determined by its ICAAP.

Canadian Tire Bank Pillar 3 Disclosures

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