Home Breadcrumb caret Industry News Breadcrumb caret Industry OSFI unwinds temporary increase to covered bond limit The limit was raised last year alongside other measures designed to help financial institutions weather the pandemic By Staff | April 6, 2021 | Last updated on April 6, 2021 1 min read iStockphoto The Office of the Superintendent of Financial Institutions (OSFI) has unwound a temporary increase to the covered bond limit for federally regulated financial institutions, effective immediately. Covered bonds are debt securities issued by a financial institution designed to cover claims should an issuer fail. Normally, a bank’s issuance of covered bonds is limited to 5.5% of its total assets for bonds issued to the market and pledged directly to the Bank of Canada. In March 2020, OSFI raised the covered bond limit to 10% of a bank’s total assets (a bank’s maximum amount of pool assets relating to market instruments remained limited to 5.5%). The measure was announced alongside other changes designed to help financial institutions weather the pandemic. “The uncertainty caused by the first wave of the Covid-19 pandemic made it necessary to adjust certain regulatory requirements including the covered bond limit,” Ben Gully, assistant superintendent, regulation sector with OSFI, said in a statement. “With market conditions stabilizing, it’s fitting that the covered bond limit should return to its pre-pandemic level too.” Last month, OSFI announced it will unwind adjustments to the market risk capital requirements for banks as of May 1. OSFI has yet to announce when a temporary halt on banks’ dividend hikes and share buybacks will be lifted. Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. Save Stroke 1 Print Group 8 Share LI logo