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B.C. Reg. 330/90
O.C. 1354/90
Deposited September 7, 1990
This consolidation is current to February 27, 2024.

Financial Institutions Act

Investment and Lending Regulation

[includes amendments up to B.C. Reg. 368/2007, November 23, 2007]

Contents
1Interpretation
2Interpretation
3Investment and lending policy of financial institutions
4Repealed
5Limits and conditions on investment in real estate
6Exemption from section 138 (1) (d) of the Act
6.1Exemption from sections 136 (3) to (5), 137, 138 (1) (c) and 140 to 143 of the Act
6.2When section 138 (1) (d) of the Act does not apply to a financial institution
7Investment and loan committee

Interpretation

1   In this regulation:

"Act" means the Financial Institutions Act;

"commercial lease" means commercial lease as defined in section 14 (1) of the Capital Requirements Regulation;

"commercial loan" means commercial loan as defined in section 14 (1) of the Capital Requirements Regulation;

"low-risk investment" means an investment in assets of a trust company or credit union that under the Capital Requirements Regulation have a weighting factor of 0.5 or less.

[am. B.C. Reg. 598/2004, s. 1.]

Interpretation

2   In this regulation:

"extraprovincial corporation" means an extraprovincial credit union or an extraprovincial trust corporation authorized to carry on deposit business, whose primary jurisdiction is not Canada or a province designated under section 158 (5) of the Act;

"financial institution" means a credit union or insurance company.

[en. B.C. Reg. 598/2004, s. 2.]

Investment and lending policy of financial institutions

3   The following are prescribed for the purpose of section 136 (5) of the Act as matters that must be contained in the investment and lending policy of a financial institution or extraprovincial corporation:

(a) Repealed. [B.C. Reg. 103/92, s. 1.]

(b) criteria for evaluating applications for loans and leases;

(c) procedures for monitoring and managing loans and leases and for realizing on security given for loans and leases;

(d) criteria for classifying non-productive loans;

(e) procedures for monitoring and managing non-productive loans;

(f) criteria governing how non-productive loans shall be accounted for;

(g) criteria governing entering into off-balance sheet transactions for the purpose of hedging;

(h) in the case of a credit union authorized to carry on deposit business, or an extraprovincial corporation, procedures for monitoring and managing interest rate risk, including procedures for monitoring and comparing financial asset cash flow profiles and financial liability cash flow profiles;

(i) in the case of a credit union authorized to carry on deposit business, or an extraprovincial corporation, a requirement that at least a specified percentage of its total assets be held in low-risk investments;

(j) the powers and duties of any committees or officers to whom the power to make investments or loans is delegated from the directors and any conditions to which the delegations are subject;

(k) an upper limit on the aggregate amount of money that the financial institution and its subsidiaries or the extraprovincial corporation and its subsidiaries may

(i) lend under all loans, and

(ii) commit under all guarantees or other financial obligations, to any combination of one person and that person's associates.

[am. B.C. Regs. 103/92, s. 1; 598/2004, s. 3.]

Repealed

4   Repealed. [B.C. Reg. 11/94, s. (a).]

Limits and conditions on investment in real estate

5   For the purpose of section 138 (1) of the Act, an extraprovincial corporation or credit union shall not invest, directly or indirectly, in land, except land acquired for its own use or acquired in settlement or partial settlement of loans and held for less than 7 years, if the investment would result in the extraprovincial corporation or credit union having a total investment, directly or indirectly, in land that exceeds in the aggregate 10% of its assets.

[am. B.C. Regs. 103/92, s. 2; 598/2004, s. 4.]

Exemption from section 138 (1) (d) of the Act

6   Section 138 (1) (d) of the Act does not apply to or in respect of investments or loans that

(a) in the course of the underwriting of a security issue, are made by a financial institution's subsidiary carrying on the business of a broker or underwriter of or dealer in securities, or

(b) are made by a financial institution's subsidiary that is a venture capital corporation as defined in section 141 of the Act.

Exemption from sections 136 (3) to (5), 137, 138 (1) (c) and 140 to 143 of the Act

6.1   Sections 136 (3) to (5), 137, 138 (1) and 140 to 143 of the Act do not apply to the following:

(a) a trust company;

(b) an extraprovincial trust corporation that is authorized to carry on trust business only;

(c) an extraprovincial insurance corporation.

[en. B.C. Reg. 598/2004, s. 5.]

When section 138 (1) (d) of the Act does not apply to a financial institution

6.2   (1) For the purpose of section 141 (2) (a) of the Act, section 138 (1) (d) does not apply to a financial institution or extraprovincial corporation that directly or indirectly acquires, holds or controls more than 10% of the voting shares in a corporation or more than 10% interest in any entity that carries on one or more of the following types of businesses or activities as its primary business:

(a) banking;

(b) insurance business;

(c) trust business, deposit business or both;

(d) the business of a broker or underwriter of or dealer in securities;

(e) mutual fund investment;

(f) a business or activity specified in section 2 of the Prescribed Types of Businesses Regulation.

(2) Despite subsection (1), a financial institution or an extraprovincial corporation may not directly or indirectly acquire, hold or control

(a) voting shares or interest in

(i) a corporation or entity engaged in a type of business or activity referred to in subsection (1) (d) to (f),

(ii) a venture capital corporation as defined in section 141 (1) of the Act, or

(iii) a corporation referred to in section 141 (2) (c) of the Act

if the acquisition, holding or control would result in the financial institution or extraprovincial corporation directly or indirectly acquiring, holding or controlling a total investment in all those corporations and entities that exceeds 5% in the aggregate of the financial institution's or extraprovincial corporation's assets, or

(b) voting shares or interest in

(i) a corporation or other entity engaged in a type of business or activity referred to in section (2) (e) of the Prescribed Types of Businesses Regulation, or

(ii) a venture capital corporation as defined in section 141 (1) of the Act,

if the acquisition, holding or control would result in the financial institution or extraprovincial corporation directly or indirectly acquiring, holding or controlling a total investment in all those corporations and entities that exceeds 2% in the aggregate of the financial institution's or extraprovincial corporation's assets.

[en. B.C. Reg. 598/2004, s. 5; am. B.C. Reg. 368/2007.]

Investment and loan committee

7   In addition to the duties specified in the Act, the investment and lending committee of a financial institution must

(a) ensure the financial institution has procedures in place to implement the investment and lending policies of the financial institution,

(b) in the case of an extraprovincial corporation or credit union, review and approve, at least annually,

(i) the credit approval procedures of the financial institution, and

(ii) the interest rate assessment report of the extraprovincial corporation or credit union showing the comparison between the profile of interest rates payable to it for its financial assets and the profile of interest rates payable by it for its financial liabilities, and

(c) determine, at least annually,

(i) whether the financial institution has adequate commercial lending and leasing experience and expertise to implement the commercial lending and leasing policies of the financial institution, and

(ii) whether the financial institution has an adequate capital base in relation to the commercial lending and leasing business to be carried on by it.

[am. B.C. Regs. 11/94, s. (b); 598/2004, s. 6.]

[Provisions of the Financial Institutions Act, R.S.B.C. 1996, c. 141, relevant to the enactment of this regulation: sections 136 (5) and 138, 289]