Archive · 19 Dec 2025
Canada Banks Hold Excess Capital Amid Stable Risks
Canada's biggest banks have a lot of extra money, about C$60 billion, which they could use to help the economy.
The country's financial regulator, OSFI, said they don't need to change the rules about how much money banks must keep as a safety cushion.
This is because the banks already have more than enough.
The extra money could be used to give more loans to businesses, especially smaller ones.
OSFI also mentioned that while there are some risks, like high debts and uncertainty about trade deals, the overall situation is stable.
The Canadian economy has been doing okay, with jobs and growth picking up.
However, there are still some worries, especially about the upcoming talks to update the trade agreement with the US and Mexico.
Canada's six largest banks hold C$60 billion in excess capital above regulatory minimum requirements.
OSFI maintained the domestic stability buffer at 3.5% for the fifth consecutive review.
Banks have an average CET1 ratio of 13.6%, well above the required 11.5%.
OSFI encouraged banks to use excess capital to support lending to businesses, particularly small- and medium-sized enterprises.
Proposed changes to lower risk weightings for corporate and real estate loans are expected to be finalized late next year.
- Who
- Office of the Superintendent of Financial Institutions (OSFI) and Canada's six largest banks
- What
- OSFI maintained capital requirements for banks, noting they hold C$60 billion in excess capital
- When
- Announced on Thursday, with proposed changes for corporate and real estate loans to be finalized late 2024
- Where
- Canada
- Why
- To ensure financial stability and encourage lending to businesses, especially small- and medium-sized enterprises, amid stable but uncertain economic conditions
- Excess Capital
- C$60 billion ($43.5 billion)
- Domestic Stability Buffer
- 3.5%
- Minimum CET1 Capital Requirement
- 11.5% of risk-weighted assets
- Average CET1 Ratio of Big Six Banks
- 13.6%
- Proposed Changes for Corporate and Real Estate Loans
- Risk weighting reduction, finalization expected late 2024
- Major Vulnerabilities in Banking System
- Elevated but stable, including high household debt and global uncertainty
- Canadian Economy Growth (Q3 2023)
- 2.6% annualized rate
- USMCA Renegotiation
- Scheduled for 2024