May 23, 2006 Organization

Montréal – The Autorité des marchés financiers (AMF) will be revising its guideline in respect of capital adequacy requirements for financial service cooperatives to reflect the new Basel Capital Accord (Basel II). The current guideline is based on the first Basel Capital Accord (Basel I), which was adopted in 1988.

Basel II is an international agreement on capital calculation and adequacy designed to build a solid framework for prudent regulation of capital, supervision and market discipline. The new agreement is more complex than the one currently in place because it establishes a closer relationship between capital requirements and the risks facing each institution, and because its greater flexibility takes into account the various activities performed by financial institutions. Basel II is also designed to enhance risk management and financial stability. Like other regulatory authorities, such as the Office of the Superintendent of Financial Institutions Canada, the AMF will be revising its guideline in respect of capital adequacy requirements for financial service cooperatives to reflect the new Basel Accord. The revised framework will be effective on January 1, 2009.

The AMF has notified the Desjardins Group, the only targeted entity, about how its guideline would be implemented and will be releasing the various capital calculation methods provided for in Basel II.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector.

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