The Globe and Mail reports in its Saturday, April 4, edition that Office of the Superintendent of Financial Institutions superintendent Jeremy Rudin says he is ready to further reduce minimum capital requirements for banks if the economic fallout of COVID-19 chews into capital reserves and challenges banks' capacity to keep lending through the crisis. The Globe's Mark Rendell and James Bradshaw write that Mr. Rudin says the OSFI will make additional cuts to the domestic stability buffer as required. He did not give any indication as to whether OSFI will also ask banks to cut dividends. British and European regulators urged banks to stop payments to investors last week, and on Wednesday the U.K.'s largest banks said they were halting dividend payments.
When asked if OSFI would follow suit, Mr. Rudin noted the relative strength of Canadian bank capital levels and said that OSFI is taking an incremental approach in response to the crisis. OSFI has already asked banks not to raise dividends or to buy back shares. Mr. Rudin says: "I don't know if we will be obliged to make another decision about the domestic stability buffer, and I certainly don't know when. All I know is we stand ready to do it."
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