Financial Institutions Act

LIQUIDITY REQUIREMENT REGULATION

[includes amendments up to B.C. Reg. 102/92]

Interpretation

1 In this regulation:

"Act" means the Financial Institutions Act;

"credit union" does not include a central credit union;

"debt liability" means a bond, debenture, note, certificate of deposit or other similar instrument, but does not include a mortgage;

"deposit taking institution" means

(a) a trust company,

(b) a credit union,

(c) a bank,

(d) a corporation that is a subsidiary of a bank and is a loan company to which the Loan Companies Act (Canada)¹ applies,

(e) an extraprovincial trust corporation,

(f) either of the following as defined in the Cooperative Credit Associations Act (Canada): a cooperative credit society; an association, or

(g) a credit union incorporated under the laws of another province;

"specified borrowings" of a trust company or credit union means the aggregate of

(a) overdrafts by the trust company or credit union, as shown in the accounting records, and

(b) debt obligations owed to savings institutions that

(i) are repayable to the lender on demand of the lender or have a term to maturity when issued of not more than 7 days, and

(ii) are borrowed to enable the trust company or credit union to meet its short term requirements for liquid funds

but does not include debt obligations payable to, or overdrafts with, the Bank of Canada in connection with clearing activities;

"prescribed liquid assets" means those assets that under section 3 are prescribed as the liquid assets of a trust company or credit union.

[am. B.C. Reg. 102/92, s. 1.]

Application

2 This regulation does not apply to an extraprovincial trust corporation.

Prescribed types of liquid assets

3 For the purposes of section 67 (1) and (2) of the Act and of sections 4 and 5 (4) of this regulation, the assets of a trust company authorized to carry on deposit business or of a credit union, that are unencumbered and are of any of the following types, are prescribed as the liquid assets of the trust company or credit union:

(a) cash on hand and deposits in other deposit taking institutions that are repayable to the depositor on demand of the depositor, less specified borrowings;

(b) at book value, any term deposits, bearer deposit notes, deposit certificates and similar instruments, issued by another deposit taking institution, that are repayable to the depositor on demand of the depositor or after notice given by the lender of not more than 100 days, or have a term left to maturity of not more than 100 days;

(c) at book value, treasury bills of Canada or a province;

(d) at market value, any security instruments that are issued or guaranteed by the Government of Canada, a province or a municipality;

(e) at book value, banker's acceptances that have a term left to maturity of one year or less;

(f) at book value, loans that

(i) are not loans to an individual,

(ii) are repayable to the lender on demand of the lender or after notice given by the lender of not more than 100 days, or have a term left to maturity of not more than 100 days, and

(iii) are fully secured by the types of assets specified in paragraphs (b) to (d);

(g) accrued interest on all liquid assets.

[am. B.C. Reg. 102/92, s. 2.]

Liquidity requirement for deposit taking trust companies

4 For the purposes of section 67 (1) of the Act, a trust company authorized to carry on deposit business has sufficient liquid assets in relation to the business carried on by it if, but only if, the aggregate amount of its prescribed liquid assets is at least 20% of the aggregate amount of its liabilities described in paragraphs (a) to (d):

(a) deposits that are repayable on demand;

(b) any

(i) other type of deposit, and

(ii) debt liabilities

that are repayable to the holder on demand of the holder or after notice given by the holder of not more than 100 days, or that have a term left to maturity of not more than 100 days, excluding specified borrowings;

(c) any loans or security instruments that are guaranteed by the trust company and are repayable to the holder on demand of the holder or after notice given by the holder of not more than 100 days, or have a term left to maturity of not more than 100 days;

(d) accrued interest on any of the deposits, liabilities or loans described in this subsection and under any security instrument described in paragraph (c).

[am. B.C. Reg. 102/92, s. 3.]

Liquidity requirement for credit unions

5 (1) In this section "deposit and other debt liabilities" includes accrued interest on them, but does not include liabilities of the types specified as capital items under section 3 of the Capital Requirements Regulation or accrued interest on those liabilities.

(2) For the purpose of subsections (3) and (4) (a), a portion of a credit union's cash on hand that does not exceed 1% of its aggregate deposit and other debt liabilities may be counted as part of its deposits in B.C. Central Credit Union.

(3) Where 10% of a credit union's aggregate deposit and other debt liabilities does not exceed 1.5% of the aggregate value of all credit union assets in British Columbia, then, for the purpose of section 67 (2) (a) of the Act, the credit union has sufficient liquid assets in relation to the business carried on by it if, but only if, the credit union has deposits, including accrued interest, in B.C. Central Credit Union that are at least equal to 10% of the depositor credit union's deposit and other debt liabilities.

(4) Where 10% of a credit union's aggregate deposit and other debt liabilities exceeds 1.5% of the aggregate value of all credit union assets in British Columbia, then, for the purpose of section 67 (2) (a) of the Act, the credit union has sufficient liquid assets in relation to the business carried on by it if, but only if, the credit union

(a) has deposits, including accrued interest, in B.C. Central Credit Union in an amount that is at least equal to 1.5% of the aggregate value of all credit union assets in British Columbia, and

(b) has prescribed liquid assets, inclusive of the deposits referred to in paragraph (a), in an amount that is at least equal to 10% of the credit union's aggregate deposit and other debt liabilities.

[am. B.C. Reg. 102/92, s. 4.]

Liquidity report

6 Within 90 days after the end of its financial year in each year, a trust company that is authorized to carry on deposit business or a credit union shall file with the superintendent a report made up to the financial year end showing sufficient particulars of the calculation of the amount that constitutes sufficient liquid assets for that trust company or credit union.

[en. B.C. Reg. 102/92, s. 5.]

[Provisions of the Financial Institutions Act, R.S.B.C. 1996, c. 141, relevant to the enactment of this regulation: sections 67 and 289 (3) and (4)]

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