<\/p>\n
Drop in DSB will lead to lower capital levels, higher risk exposure for big banks.<\/p>\n
The Office of the Superintendent of Financial Institutions\u2019 (OSFI) decision to lower capital buffers for Canada\u2019s big banks is a negative from a credit rating perspective, says Moody\u2019s Ratings.<\/p>\n
Last week, OSFI announced a reduction in the so-called domestic stability buffer (DSB) to 3% of risk-weighted assets down from 3.5%, and it reduced the range for the buffer to 0% to 3% \u2014 moves that the regulator said are intended to help free up the banks to expand their lending and investing at a critical moment for the economy.<\/p>\n
\u201cOverall, we view these changes as credit negative because they effectively facilitate lower capital levels at a time when these banks have already been managing toward thinner capital buffers of 100\u2013150 basis points above minimum requirements,\u201d the rating agency said in a new report.\u00a0<\/span><\/p>\n While the regulator said that its decision to lower the DSB was designed to boost banks\u2019 ability to support the economy, Moody\u2019s said that their recent moves to thinner capital cushions have largely come through dividend increases and share buybacks.<\/p>\n Moreover, the regulator\u2019s move to lower the buffers \u201cweakens systemwide capitalization, increasing sensitivity to earnings volatility, asset quality deterioration or market shocks, particularly in an environment of elevated geopolitical and trade-related uncertainty,\u201d it said. It added that it also \u201cintroduces pro-cyclicality risks if banks respond by increasing capital distributions or risk-weighted asset growth late in the cycle.\u201d\u00a0<\/span><\/p>\n \u201cOver time, this dynamic could amplify vulnerabilities if credit quality deteriorates or macroeconomic conditions weaken,\u201d it said.<\/p>\n In the current year, the reduced regulatory buffer \u201cwill likely result in structurally lower reported common equity tier 1 ratios across the Canadian banking system, weakening credit profiles at the margin,\u201d Moody\u2019s said.<\/p>\n <\/p>","protected":false},"excerpt":{"rendered":" Drop in DSB will lead to lower capital levels, higher risk exposure for big banks. The Office of the Superintendent of Financial Institutions\u2019 (OSFI) decision to lower capital buffers for Canada\u2019s big banks is a negative from a credit rating perspective, says Moody\u2019s Ratings. Last week, OSFI announced a reduction in the so-called domestic stability […]<\/p>\n","protected":false},"author":1,"featured_media":6262,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6261","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bez-rubriki"],"featured_image_src":{"landsacpe":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/06\/Moodys-6-1140x445.jpg",1140,445,true],"list":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/06\/Moodys-6-463x348.jpg",463,348,true],"medium":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/06\/Moodys-6-300x225.jpg",300,225,true],"full":["https:\/\/relinvestmentsgroup.com\/wp-content\/uploads\/2026\/06\/Moodys-6.jpg",1200,900,false]},"_links":{"self":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/6261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/comments?post=6261"}],"version-history":[{"count":1,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/6261\/revisions"}],"predecessor-version":[{"id":6263,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/posts\/6261\/revisions\/6263"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/media\/6262"}],"wp:attachment":[{"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/media?parent=6261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/categories?post=6261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/relinvestmentsgroup.com\/en\/wp-json\/wp\/v2\/tags?post=6261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}