Specialized Financing (Banks) Regulations

The Specialized Financing (Banks) Regulations, made under the Bank Act, aim to regulate specialized financing activities by banks. These regulations define a "specialized financing entity" and set out conditions for banks to acquire control of or hold substantial investments in such entities.

The regulations limit the amount of investment that can be made by a bank in a specialized financing entity to 10% of its regulatory capital, with certain exceptions. Banks are also prohibited from acquiring control of or holding substantial investments in entities primarily engaged in leasing motor vehicles, providing temporary possession of personal property, or acting as an insurance broker.

The regulations also establish limits on the length of time that a bank can hold control of or a substantial investment in a specialized financing entity, with a maximum of 13 consecutive years. Additionally, banks are prohibited from acquiring control of or holding substantial investments in entities if the aggregate balance sheet value exceeds $250 million.

These regulations are intended to prevent banks from engaging in excessive risk-taking and ensure that their specialized financing activities align with their overall business strategy.