Article content

Canada’s financial regulator pledged that a key capital requirement for the country’s largest banks will remain stable as long as he’s in the role.

Sign In or Create an Account

or View more offersArticle content

Peter Routledge, superintendent of financial institutions, said Wednesday he wants to give lenders “capital-planning certainty,” after lowering the domestic stability buffer in June, the first change in three years. The buffer is often compared to a rainy-day fund and, at the time, the regulator cut it by 50 basis points to three per cent.

Article contentWe apologize, but this video has failed to load.Try refreshing your browser, or
tap here to see other videos from our team.We apologize, but this video has failed to load.Try refreshing your browser, or
tap here to see other videos from our team.Article content

Story continues below

This advertisement has not loaded yet, but your article continues below.

Article content

“I’m superintendent. I make the final decision. You can take three per cent to the bank. It will stay there. We are not changing it,” he said at a conference hosted by Bank of Nova Scotia, noting that his term ends in June 2028.

Article contentArticle content

Routledge also noted that the Office of the Superintendent of Financial Institutions has imposed no restrictions on how banks use the excess capital, unlike during the COVID-19 pandemic, when the regulator limited dividends and share buybacks.

Article contentLatest Entrepreneur

  1.  
  2.  
  3.  
  4.  
  5.  
  6.  
  7.  
  8.  
  9.  
  10.  
  11.  
  12.  
  13.  
  14.  
  15.  
  16.  
  17.  
  18.  
  19.  
  20.  

Article content

Canada’s biggest banks are now required to have Common Equity Tier 1 capital of at least 11 per cent of risk-weighted assets. All six banks comfortably exceed that minimum, and Routledge has pointed in the past to the excess capital the firms hold and suggested he’d like to see more lending to help support economic growth.

Article contentSecond Lists

  1.  
  2.  
  3.  
  4.  
  5.  
  6.  
  7.  
  8.  
  9.  
  10.  
  11.  
  12.  
  13.  
  14.  
  15.  
  16.  
  17.  
  18.  
  19.  
  20.  

Article content

But it’s ultimately up to the banks’ boards to make capital-allocation decisions, he said Wednesday. “You should never rely on a regulator to allocate capital. We are not built for that.”

Article content

Also speaking at the Scotiabank conference Wednesday, several bank chief executive officers said they expect to pursue organic growth followed by share repurchases, favouring those options over large-scale acquisitions.

Article content

Scotiabank cheif executive Scott Thomson described his firm’s capital-allocation priorities as “organic growth first, share repurchase second.”

Article content

Toronto-Dominion Bank’s Raymond Chun said his company has the capacity for “significant buybacks,” while Royal Bank of Canada and Bank of Montreal also said they plan to continue returning excess capital through share repurchases.

Article content

Bloomberg.com

Article contentThis advertisement has not loaded yet.Trending


  1. Trump is angry about the loonie ‘imbalance’: But what does he mean and what can he do about it?

    News


  2. CRA denies tax credit to B.C. divorced dad paying child and spousal support

    Personal Finance

  3. Story continues belowThis advertisement has not loaded yet, but your article continues below.

  4. Canada can afford to wait out Trump’s trade war, say two prominent policy vets

    Economy


  5. Trump’s US$5,000 payout promise underscores GOP midterm peril

    News


  6. Trump’s targeted Canada tariffs offer scope and time for a deal

    Economy