Regulatory Capital (Banks) Regulations

The Regulatory Capital (Banks) Regulations were made under the Bank Act to define the regulatory capital of a bank. The regulations came into effect on August 31, 1992.

The regulations define key terms such as "designated entity", "insurance company", and "minority interest". The regulatory capital is calculated by aggregating shareholders' equity, members' equity (for federal credit unions), minority interests, and subordinated indebtedness. However, the amount of goodwill is excluded from this calculation.

In addition to the definition of regulatory capital for a bank, the regulations also outline specific requirements for certain types of securities or memberships shares that can be included in the calculation of regulatory capital.

The regulations also address the calculation of regulatory capital for banks that have control over an insurance company or a securities dealer. In these cases, the amount of regulatory capital is reduced by the aggregate of shareholders' equity and subordinated indebtedness of the controlled entity, as well as investments and loans made to the controlled entity.

Overall, the Regulatory Capital (Banks) Regulations provide clarity on the definition and calculation of regulatory capital for banks in Canada.