The Office of the Superintendent of Financial Institutions says that firms must be careful with their capital, and should be consulting the regulator before they use any capital to buy back shares.

OSFI notes that many Canadian banks and insurance companies have authorized normal course issuer bids in place, but it reminds them that although it may have approved these bids in the past,

“OSFI expects that prudent capital management practices will be applied at all times and that the timing of repurchases under those programs, as well as the amount of shares being repurchased, would be consistent with such prudent practices,” the regulator said in advisory released today. Currently, shares are not generally being repurchased, it says.

Additionally, OSFI says it believes that “the current environment calls for increased conservatism in capital management and that all financial institutions that have normal course issuer bids in place should not be repurchasing shares pursuant to those bids without first consulting OSFI.”

It says that this practice should continue until this advisory is withdrawn.

IE