The Globe and Mail reports in its Tuesday, July 6, edition that Canada's top banking regulator -- Peter Routledge, who took the helm at the Office of the Superintendent of Financial Institutions (OSFI) on June 29 -- is cautious about lifting the current restrictions on dividend increases and share buybacks for Canadian banks. The Globe's Rita Trichur writes that those constraints were implemented in March, 2020, in response to the pandemic, and removing them prematurely could spell disaster because the global crisis is not over yet.
Mr. Routledge recently said, "It's better to err on the side of keeping these restrictions on a bit too long than unwinding them a bit early." Ms. Trichur says his conservative position is entirely appropriate. She says we should be relieved that OSFI is playing it safe. Major lenders have continued to make their quarterly payouts -- they just have not been allowed to increase them or buy back their shares. Investors are eager for those controls to end. From their perspective, Canada's Big Six banks are brimming with excess capital. Royal Bank of Canada says when regulatory restrictions are lifted, it "will look to accelerate capital return to our shareholders."
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