Canadian banking regulator stretched – watchdog

* Regulator doing an adequate job at present – watchdog

* OSFI pressured by ever increasing workload

* Banks say regulator having trouble in some areas

By David Ljunggren

OTTAWA, Oct 26 (BestGrowthStock) – The regulator overseeing
Canada’s banking system is increasingly stretched and could
find it hard to attract enough competent staff to do its job
properly, Parliament’s official watchdog said on Tuesday.

Auditor General Sheila Fraser said in a report that the
Office of the Superintendent of Financial Institutions (OSFI)
adequately supervised the banks at present.

“However, the growing volume and complexity of its work is
increasing the demands on its human resources,” she wrote,
noting an ever larger number of complex financial products.

“This challenge, combined with pressures on training and
compensation, could affect the office’s ability to attract and
retain qualified staff to maintain its capacity and competency
to carry out its supervisory mandate.”

Thanks in part to tight supervision and a more conservative
banking culture, the banks survived the global economic
recession with relatively few problems. Canada’s big banks are
among the world’s best capitalized.

The country’s big six banks are: Royal Bank of Canada
(RY.TO: ), Toronto-Dominion Bank (TD.TO: ), Bank of Nova Scotia
(BNS.TO: ), Bank of Montreal (BMO.TO: ), Canadian Imperial Bank of
Commerce (CM.TO: ) and National Bank of Canada (NA.TO: ).

Executives from the banks told Fraser’s team that they felt
OSFI was a strong supervisor and said the relationship worked
well. Yet they also noted OSFI was having trouble reviewing the
banks’ capital models because of their complexity.

Fraser said the time for training was limited, which could
mean OSFI staff might not be exposed to the latest financial
market innovations.

Fraser said that, as of March 10 this year, 10 percent of
positions on large bank supervisory teams and 12 percent of
jobs on the specialist groups that support the teams were
vacant. Half the positions have been open for a year.

She cited OSFI as saying there “was little flexibility to
address unexpected events” and said the time taken to dealing
with documents resulted in less time available for detecting
and analyzing risks.

In an official response to Fraser, OSFI said it was looking
at ways of boosting salaries and training.

Fraser found that OSFI, working with the federal Finance
Department and others, regularly and quickly shared important
information during the global financial crisis.

But she noted that the Finance Department was not in the
habit of regularly reviewing the regulatory framework to ensure
it was relevant.
(Reporting by David Ljunggren; editing by Rob Wilson)

Canadian banking regulator stretched – watchdog