With the release of planned new capital rules, Canada’s banking regulator will no longer be so strict with banks and their ability to use excess capital to pay dividends, buyback shares or make acquisitions.
On Monday, the Office of the Superintendent of Financial Institutions published a new advisory in the wake of new capital rules agreed by the Basel Committee on Banking Supervision and the Group of Governors and Heads of Supervision over the weekend.
The advisory states that, “In light of the recent international developments providing greater certainty as to the reform of capital rules,” while OSFI will still expect sound capital management from the banks, it “will no longer require the increased conservatism in capital management announced late in 2008.”
Since October 2008, while the new capital rules were being formulated, OSFI has been promoting increased conservatism in capital management. “To encourage a more conservative approach to capital management during this period of uncertainty, OSFI increased its focus on proposals by regulated institutions to carry out transactions that could negatively impact capital levels. Examples of such transactions include share repurchases, dividend increases and acquisitions.”
OSFI notes that the reforms are not yet final, but that once they are, it intends to issue guidance to implement them in Canada. In the meantime, banks are still expected to be prudent with their capital, but there is more leeway than they’ve had for the past couple of years.
IE
Latest news In From the Regulators
Failed U.S. bank’s investors to see some restitution
CEO embezzled bank funds in crypto "pig butchering" scheme
- By: James Langton
- November 5, 2024 November 5, 2024
- 12:31
FCA expands research unbundling to fund managers
U.K. regulator aims to improve access to research, market transparency
- By: James Langton
- November 5, 2024 November 5, 2024
- 12:27
Canadian pleads guilty in global pump-and-dump
Alleged mastermind to be sentenced in U.S. court next May
- By: James Langton
- November 4, 2024 November 4, 2024
- 17:06
Tribunal rejects tougher sanctions in crypto case
Panel dismisses call for stronger deterrence given risks posed by crypto, social media
- By: James Langton
- November 4, 2024 November 4, 2024
- 15:32
Today's top stories
CRA confirms its approach to interest deductibility
Agency provides examples of when income-earning purpose is met
- By: Jamie Golombek
- November 6, 2024 November 6, 2024
- 16:00
Stress tests prove their worth: BoC research
Policies have affected credit growth, housing prices, delinquencies
- By: James Langton
- November 6, 2024 November 6, 2024
- 16:14
Advisors talk Trump, politics and investing post–U.S. election
No one can predict what markets will do over the next four years, but there are items to watch
- By: Katie Keir and Michelle Schriver
- November 6, 2024 November 6, 2024
- 16:24
Proposed CRA audit powers sound alarms
If proposals pass, CRA can impose harsh new penalties and compel taxpayer testimony under oath
- By: Rudy Mezzetta
- November 5, 2024 November 5, 2024
- 14:00