Regulator Declares Canada's Desjardins Group "Too Big to Fail" Posted by AVCU on 3:07 PM

Canada's largest credit union has been declared "too big to fail" by the Quebec Financial Markets Authority, identifying it as a so-called systematically important institution and putting it in the same class as Canada's six largest banks.

Under international Basel financial rules, systemically important institutions are financial companies deemed to be so large and interconnected that their failure would pose a threat to the financial system. Desjardins now joins Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada as being deemed domestically systemically important.  The rules require that such institutions hold more capital in reserve than their peers as a way to absorb losses in the event they get into trouble.