CDIC adds fifth premium category

Summary#

This is a proposed amendment to the Canada Deposit Insurance Corporation Differential Premiums By-law from the Canada Deposit Insurance Corporation (CDIC). It would add a fifth premium category, update some technical reporting rules to match the Office of the Superintendent of Financial Institutions (OSFI) forms and guidance, and change how some small institutions are scored and report information. The proposal was published on October 19, 2024 and comments are open for 30 days.

What it does#

• Adds a fifth premium category to CDIC’s premium table and redraws the score bands used to place institutions into categories.
  • Proposed premium percentages (each is a percentage of the statutory maximum premium rate, which is 1/3 of 1%):
    • Category 1 (score ≥ 90): 22.5%
    • Category 2 (score ≥ 80 and < 90): 27%
    • Category 3 (score ≥ 65 and < 80): 40.5%
    • Category 4 (score ≥ 50 and < 65): 72.9%
    • Category 5 (score < 50): 100%
• Changes consequences for late or missing data filings so institutions that don’t provide required information can be placed in premium Category 5 while they remain late.
• Aligns rules for small institutions with OSFI’s recent guideline:
  • A Category III SMSB (small and medium-sized deposit-taking institution) would not have to submit certain financial items to CDIC.
  • Category III SMSBs get a quantitative score out of 45 points; that score is proportionally converted to the usual 60-point scale (effectively multiplied by 1 and one-third).
• Updates technical reporting and calculation details to match OSFI’s Basel reporting (BCAR):
  • Changes certain credit conversion factors to 10% / 25% / 40%.
  • Replaces an EAD description with 1.4 × (replacement cost + potential future credit exposure).
  • Fixes wording and formula references in several reporting elements.
• If made, the amendment would take effect for the 2025 premium year on April 1, 2025.

Who's affected#

• CDIC member institutions — banks and other insured deposit-takers — are the primary group affected.
• Smaller banks and deposit-taking institutions designated as Category III SMSBs will see reduced reporting requirements and a different scoring method.
• Some member institutions will see their annual CDIC premiums go up. Some will see them go down, because the new five-category structure redistributes how premiums are charged. The notice does not identify which institutions those will be.
• The general public and depositors are not directly told to expect immediate changes in deposit insurance coverage by this amendment. The change affects how much member institutions pay into the CDIC system.

Why it matters#

• The switch to five premium categories is meant to make premium charges fairer. It lets CDIC separate institutions into more risk-based buckets so higher-risk institutions pay relatively more and lower-risk institutions pay relatively less.
• Aligning reporting rules with OSFI should reduce confusion and duplicate work for smaller institutions, while keeping CDIC’s data consistent with the regulator’s forms.
• Technical fixes keep CDIC’s premium calculations up to date with current regulatory reporting standards. That helps ensure premiums are based on comparable, accurate data.
• The change is still a proposal. Interested parties had 30 days from October 19, 2024 to comment before the by-law could be finalized.