Business
OSFI releases Draft Advisory regarding the impact of IFRS on regulatory capital ratios
OSFI releases Draft Advisory regarding the impact of IFRS on regulatory capital ratios
About this update from Mcan Mortgage Corporation
[{"type":"text","content":"\n\n\n\nOct. 22, 2009 (Canada NewsWire Group) -- TORONTO, Oct. 22 /CNW/ -- MCAN Mortgage Corporation (\"MCAN\" or the \"Company\") announced today that the Office of the Superintendent of Financial Institutions (\"OSFI\") has released a draft Advisory (the \"Draft Advisory\") regarding, among other things, the calculation of the regulatory capital ratios of OSFI-regulated entities resulting from the on-balance sheet treatment of assets and liabilities subject to securitization, as currently required by International Financial Reporting Standards (\"IFRS\"). The Draft Advisory is open for comment until December 31, 2009.Under Canadian generally accepted accounting principles currently followed by MCAN in the preparation of its financial statements, assets and liabilities that are subject to securitization are treated generally as off-balance sheet items. Under these principles, MCAN has not been required to reflect such assets or liabilities on its balance sheet, or include them in the calculation of its regulatory capital ratios. MCAN will begin using IFRS in the preparation of its financial statements for the financial year commencing January 1, 2011. If the IFRS rules regarding securitization are implemented in their proposed form, MCAN's assets and liabilities that are subject to securitization will be considered on-balance sheet items. The Draft Advisory contemplates that any assets and liabilities that are accounted for as on-balance sheet exposures under IFRS that are sold through securitization transactions (including insured mortgages that are securitized through the Canada Mortgage Bonds (\"CMB\") Program) undertaken after December 31, 2009 will be required to be included in the calculation of a regulated financial institution's regulatory capital ratios. Accordingly, pursuant to the measures contemplated by the Draft Advisory, if the IFRS rules regarding securitization are implemented in their proposed form, beginning with the fiscal year commencing on January 1, 2011, MCAN will be required to include any assets and liabilities that were subject to securitization transactions undertaken as of January 1, 2010 in the calculation of its regulatory capital ratios.MCAN is continuing to identify and assess the impact of the transition to IFRS on its consolidated financial statements and is working to develop a plan to minimi...