|By Marketwired .||
|February 27, 2014 02:36 PM EST||
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 02/27/14 -- British Columbia's Financial Institutions Commission (FICOM), the organization responsible for regulating the province's credit unions, today confirmed it has designated Central 1 Credit Union as a domestic systemically important financial institution (D-SIFI) within the context of the Canadian credit union system.
D-SIFIs are financial institutions whose failure would cause significant financial and economic disruption. Institutions designated as D-SIFIs are subject to additional capital and liquidity requirements and enhanced supervision by regulatory authorities.
The designation is based on Central 1's management of the liquidity of its member credit unions in British Columbia and Ontario, as well as the provision of clearing and payment settlement services for credit unions in all provinces outside of Quebec, and to other financial institutions and provincial governments.
"With the D-SIFI designation, FICOM has recognized the importance of Central 1 to the overall health and stability of the national credit union system," said Don Wright, Central 1's President & CEO.
FICOM's enhanced regulatory and supervisory framework for Central 1 as part of the D-SIFI designation includes:
1. New liquidity and capital requirements that increase Central 1's ability to absorb shocks arising from potential financial and economic stresses. 2. Stronger governance and risk management expectations for Central 1's core business activities. 3. An expectation for the development of a recovery and resolution plan.
The identification of Central 1 as a D-SIFI, as well as the regulatory and supervisory requirements, will be periodically reviewed by FICOM and updated as needed.
About the D-SIFI designation
In the wake of the 2008 financial crisis, G-20 countries collectively agreed on the need to oversee large financial institutions that could threaten financial stability and economic growth. In 2012, the Basel Committee on Banking Supervision (BCBS) established the framework for the identification of D-SIFIs. Four main criteria determine systemic importance:
Interconnectedness: Central 1 is highly interconnected with credit unions in British Columbia, Ontario, and in other provinces, as the holder of a major portion of the liquid assets of its member credit unions, and through its clearing and payment system access and liquidity support across the country.
Substitutability: Central 1's unique role as group clearer for both credit unions and centrals in British Columbia, Ontario and other provinces makes it an essential element of the national credit union system infrastructure.
Complexity: The complexity of Central 1 is based on intra-provincial arrangements for liquidity management and clearing and payments systems. This results in the potential involvement of authorities from multiple provinces in ongoing oversight and resolution.
Size: Size is a proxy for the importance of the institution in the provision of financial services. The rationale for identifying Central 1 as systemically important was not based on size.
About Central 1
Central 1 is the central financial facility and trade association for the B.C. and Ontario credit union systems. Owned primarily by its member credit unions, 43 in B.C. and 90 in Ontario, Central 1 represents a consumer-oriented, full-service retail financial system that serves 3.2 million members and collectively holds $92.0 billion in assets.
With offices in Vancouver, Mississauga and Toronto, Central 1 provides liquidity management, direct banking and payment service solutions as well as a wide range of trade services. For more information, visit www.central1.com.