SOLUS TRUST COMPANY COMPAGNIE SOLUS TRUST
(The “Company”)
Pillar 3 Disclosures
Introduction
The Office of the Superintendent of Financial Institutions (“OSFI”) requires all financial institutions to provide disclosure that provides information on the company’s risk profile and financial health. Solus Trust Company is a non-deposit taking federally regulated trust company registered under the Trust and Loan Companies Act (Canada) whose primary business is to provide trustee services, estate and executor services and administrative services in Canada. The company is classified as a Category III Small and Medium-Sized Deposit-Taking Institution (SMSB). Solus Trust Company is a wholly owned subsidiary of Raymond James Ltd. (RJL) and its ultimate parent company is Raymond James Financial, Inc. (RJF).
Enterprise Risk Management
The Board requires Solus Trust Company to implement and maintain a comprehensive approach to the governing and managing of risks. The Board requires that specific policies be established for the major types of risk. RJF may establish enterprise-wide policies and RJL may establish policies for RJL and its subsidiaries. RJF and RJL policies govern in the absence of a Trust company policy. The risk appetite of STC is modest hence a low level of residual risk is desired.
The risk management control framework includes reporting to senior management (including to the Senior Management Committee (SMC), the Conduct Review Committee (CRC) and the Audit and Risk Committee (ARC)), the appointment of a Chief Risk Officer, the appointment of Internal Audit reporting to the ARC, an annual risk self-assessment including the (Internal Capital Adequacy Assessment Process) ICAAP, a self-assessment of controls, risk management policies and procedures, ongoing training and effectiveness testing through the internal audit process.
Audit and Risk Committee (ARC) – The ARC is responsible for
the oversight of the Trust Company’s risk management framework.
Conduct Review Committee – The CRC is responsible for the
annual compliance risk assessment.
Internal Audit (IA) – Internal Audit reviews adherence to
policies including the Risk Management Policy.
Senior Management Committee – The SMC is responsible for
providing executive oversight and direction of STC. This includes areas of
risk management that in larger organizations might be managed by ALCO (Asset
and Liability Committee), Investment Committee or a Discretionary Powers
Committee.
Risk Exposure
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. For the purposes of this disclosure, the Company separates market risk into three categories: fair value risk, interest rate risk and currency risk.
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Fair value risk:
The carrying amounts of cash, accounts receivable and accounts payable and accrued liabilities approximate their fair value due to their short-term nature. -
Interest rate risk:
Interest rate risk is the risk the value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. As at December 31, 2024 the Company had no significant exposure to interest rate risk. -
Currency risk:
Currency risk arises from the possibility that changes in the price of foreign currencies will result in losses.
As at December 31, 2024, the Company’s financial assets and financial liabilities are primarily denominated in Canadian dollars. As a result, the Company is not significantly exposed to currency risk.
Operational risk
Operational risk is defined as the risk of loss resulting from people, inadequate or failed internal processes, systems and/or from external events. This includes financial losses that arise from operational failure including a lack of availability, continuity and integrity of operating processes. Solus Trust Company (STC) is exposed to operational risk across the organization as a result of the services offered, delivery channels through which services are offered, and the activities of functional and support departments. Through STC’s Board approved Operational Risk Policy, STC seeks to ensure that its operational risks are understood, identified, and managed and that necessary mitigating policies and controls are implemented, and continuously maintained to meet its business objectives and regulatory requirements, and to maintain confidence in the safety and stability of STC. For clarity, there are separate policies which address third-party risk, and business continuity. The Audit and Risk Committee of the Board of Directors has oversight of the Operational Risk Policy and program.
Credit risk
Credit risk is the risk associated with the inability of a third party to fulfill its payment obligations. The Company is exposed to credit risk relating to its cash and accounts receivable. The Company’s maximum credit risk exposure correspond to the carrying value of these financial assets.
All cash balances are held with financial institutions with credit ratings of A or above as rated by Standard & Poor’s.
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet a demand for cash to fund its obligations as they come due. The Company’s management oversees the Company’s liquidity to ensure it has access to enough readily available funds to cover its financial obligations as they come due and sustain its normal operations and future growth.
The contractual maturities of the Company’s financial liabilities are all due within one year.
Regulatory Capital
The Company is subject to the regulatory capital requirements imposed by the OSFI and has capital management policies, procedures and controls to ensure compliance with these capital requirements is maintained
The Company’s Tier 1 regulatory capital and capital ratios are published on the OSFI website and can be viewed at the link below. The Company does not have Tier 2 or Tier 3 capital.
https://www.osfi-bsif.gc.ca/Eng/wt-ow/Pages/FINDAT-tc.aspx
Capital Adequacy Requirements
Under the Capital Adequacy Requirements (“CAR”) as issued by the OSFI, the Company is required to maintain certain capital ratios using an approach with risk-weighted assets and defined formulas for determining those ratios. For the 2024 period, the Company was required to maintain minimum Common equity tier 1 (“CET1”) ratio of 7.0%, a Tier 1 capital ratio of 8.5% and a Total capital ratio of 10.5%. The Company’s capital ratios have been calculated as follows for the period ended December 31, 2024:
| 2024 | 2023 | |
|---|---|---|
| 000s | 000s | |
| Common Equity Tier 1 capital: | ||
| Share capital | $22,966 | $22,966 |
| Deficit | ($8,688) | ($4,835) |
| Intangible asset | ($111) | ($111) |
| Deferred tax asset | - | ($2,026) |
| Deferred compensation | ($901) | ($2,253) |
| Goodwill | ($1,159) | ($1,159) |
| $12,107 | $12,582 | |
| Adjusted Total Assets and Operational Risk: | ||
| Adjusted total assets | $13,781 | $14,009 |
| Operational risk | $5,075 | $2,213 |
| $18,856 | $16,222 | |
| Capital ratios: | ||
| Common Equity Tier 1 capital | 64.20% | 77.60% |
| Tier 1 capital | 64.20% | 77.60% |
| Total capital | 64.20% | 77.60% |
STC’s approach to capital adequacy and management is based on its strategy and organizational requirements. The Board delegates authority to the SMC for managing capital within approved limits. SMC reviews the Trust Company’s capital position under normal and stressed market conditions not less frequently than annually, and reports on capital to the ARC. The Trust Company is non-deposit taking and will not be making loans and many of the traditional risks will not be applicable. Stress testing of capital is designed to test risks relevant to STC and incorporated into the ICAAP. Our capital is reviewed to ensure that we have sufficient capital under normal and stressed conditions commensurate with risk.
Frequency of disclosure
2024 disclosure templateAs a smaller less complex institution with a stable risk profile, Solus Trust Company (and formerly Raymond James Trust Canada) reports these qualitative and quantitative disclosures annually, as at its fiscal year.