The Office of the Superintendent of Financial Institutions insists that it has not pushed financial institutions to boost their capital ratios across the board.

OSFI says its views on capital were outlined in a speech given by Superintendent Julie Dickson on Nov. 13, and those views have not changed. In that speech, Dickson noted that Canadian banks remain well capitalized and that the common equity ratios of the large banks are particularly high.

“This point was made because markets were demanding that Canadian banks increase capital, possibly based on a simple comparison of Tier 1 levels across global banks, even though many global banks have had capital injections from governments,” OSFI said in a statement issued Friday.

It has also noted that banks should not engage in share buy-backs without first clearing such a move with OSFI, as capital needs to be managed conservatively. However, OSFI stresses that, “Managing capital conservatively does not mean increasing capital.”

OSFI reports that it has discussed global market developments both with banks and international regulators, “as a similar phenomenon of markets taking a view on capital and driving up capital levels, is being observed globally. At the same time, to the extent banks have met market expectations regarding capital, this makes Canadian banks well-positioned to continue to lend.”

The regulator notes that it also has increased flexibility within its rules by increasing the preferred share limit to 40% from 30%, which reduces the cost of capital for financial institutions, and may further support lending.

“In short, OSFI has not pushed for higher capital ratios across the board, and OSFI agrees that capital is a cushion that should be available to be drawn down when faced with unexpected losses,” it concludes.