CDIC differential premiums reform

Summary#

The Canada Deposit Insurance Corporation (CDIC) is proposing a replacement Canada Deposit Insurance Corporation Differential Premiums By-law that would change how it sets deposit-insurance premiums for its members. If adopted, it would add a new premium category, assess members twice a year and change the scorecard and deadlines that determine each institution’s annual premium. This is a proposal (open for comments for 30 days) — it is not law yet.

What it does#

• Changes the premium categories from 4 to 5 and ties each category to a specific premium percentage (Schedule 1):
  • Premium Category 1: total score ≥ 90 → 22.5%
  • Premium Category 2: total score ≥ 80 and < 90 → 27%
  • Premium Category 3: total score ≥ 65 and < 80 → 40.5%
  • Premium Category 4: total score ≥ 50 and < 65 → 72.9%
  • Premium Category 5: total score < 50 → 100%
• Moves CDIC’s member risk classification from an annual to a semi‑annual timetable:
  • Classifications as of January 15 (using fall data) and July 15 (using spring data).
  • CDIC would notify institutions on those dates.
• Changes the premium calculation and timing:
  • Annual premium would be the average of the two semi‑annual premium rates, applied in the formula A × B × (C + D) ÷ 2, where A is 1/3 of 1%, B is insured deposit volume as of April 30 in the previous premium year, and C/D are the January/July premium rates.
  • The minimum annual premium remains $5,000.
• Changes how new member institutions are treated:
  • New members (less than two full premium years) are generally placed in Premium Category 2, unless OSFI assigns a stage of intervention (then Category 3) or other exceptions apply.
• Revises the information, scoring and deadlines used to judge risk:
  • Introduces new quantitative metrics focused on liquidity and funding (e.g., Liquidity Coverage Ratio, Net Stable Funding Ratio, High Quality Liquid Assets to Short-Term Funding).
  • Replaces the CDIC qualitative component with a new Risk and Resolvability Score (RRS) (up to 15 points).
  • Changes the examiner’s rating scale from 5 to 8 points (max 25 points).
• Reporting and deadlines:
  • Fall return due October 31 each year (used for the January 15 classification).
  • Spring return due April 30 each year (used for the July 15 classification).
  • If a return is late or missing, the institution may be treated as Premium Category 5 for the relevant days.
  • Revised returns or declarations must be submitted by July 2.
• Timing in the proposed text:
  • The proposal sets a coming‑into‑force date of April 29, 2026, with one technical provision due July 16, 2026.
  • CDIC plans the first fall return under the new regime to be due October 31, 2026, and the first premium year using the semi‑annual method to begin May 1, 2027.

Who's affected#

• Primarily the institutions that are members of Canada Deposit Insurance Corporation (banks, federally regulated deposit‑taking institutions and other CDIC members).
• Specifically called out groups include:
  • Domestic systemically important banks (D-SIBs).
  • Small and medium‑sized deposit‑taking institutions (SMSBs) in different categories.
  • New member institutions, subsidiaries, and bridge institutions (each have special rules).
• Indirectly, depositors and the financial sector may notice effects if institutions change pricing or behaviour because of different premiums. The proposal document does not identify direct effects on small businesses or the environment.

Why it matters#

• The change makes CDIC’s fee system more responsive to changes in an institution’s risk during the year. That could:
  • Lead some member institutions to pay higher or lower deposit‑insurance premiums depending on their updated risk scores.
  • Increase the incentive for institutions to fix risk or reporting problems quickly, because those issues can affect premiums within months.
• Late or missing reports can trigger the highest premium rate (Premium Category 5, 100%), creating a clear financial penalty for late data.
• The new scorecard puts more emphasis on liquidity and resolvability (how easily CDIC could resolve a failing institution), which reflects recent supervisory focus on funding risks.
• This is a proposed by‑law. It can still change after the public comment period (30 days) and is not yet in force.