{"id":28903,"date":"2022-12-08T21:17:11","date_gmt":"2022-12-08T21:17:11","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2022\/12\/08\/osfi-raises-capital-buffer-for-big-banks-to-3-as-household-debt-risks-rise\/"},"modified":"2022-12-08T21:17:11","modified_gmt":"2022-12-08T21:17:11","slug":"osfi-raises-capital-buffer-for-big-banks-to-3-as-household-debt-risks-rise","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2022\/12\/08\/osfi-raises-capital-buffer-for-big-banks-to-3-as-household-debt-risks-rise\/","title":{"rendered":"OSFI raises capital buffer for big banks to 3% as household debt risks rise"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\" data-aqa=\"nav-breadcrumb\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> Finance <\/li>\n<li class=\"breadcrumbs__item\"> Economy <\/li>\n<li class=\"breadcrumbs__item\"> Banking <\/li>\n<\/ol>\n<\/nav>\n<div class=\"article-header__detail\">\n<div class=\"article-header__detail__texts\">\n<p class=\"article-subtitle\"> Rapidly rising rate environment, geopolitical uncertainty also key risks, OSFI says <\/p>\n<\/p><\/div>\n<figure class=\"featured-image\" data-aqa=\"featured-image\"><picture class=\"featured-image__ratio\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=564&amp;h=423&amp;type=webp,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=1128&amp;h=846&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=564&amp;h=423&amp;type=jpg,&#10;                https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=1128&amp;h=846&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=472&amp;h=354&amp;type=webp,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=944&amp;h=708&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=472&amp;h=354&amp;type=jpg,&#10;                https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=944&amp;h=708&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(max-width: 767px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=288&amp;h=216&amp;type=webp,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/banks-vw1208.jpg?quality=90&amp;strip=all&amp;w=576&amp;h=432&amp;type=webp 2x\" type=\"image\/webp\"\/><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">Bank towers and signage in Toronto&#8217;s financial district.<\/span> <span class=\"credit\">Photo by Peter J. Thompson\/National Post<\/span> <\/figcaption><\/figure>\n<\/div>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>The Office of the Superintendent of Financial Institutions raised the capital buffer financial institutions must hold to three per cent, citing increased risked from high household indebtedness and the rapid rise in interest rates.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment8952973881193505839174466228191232\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment8952973881193505839174466228191232\">Advertisement 2<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__inner__container\" data-ad=\"[[6,6],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"6x6\" data-ad-loc=\"2\" data-ad-mobile=\"[[6,6],[320,50],[300,50],[300,250],[300,600]]\" data-aqa=\"advertisement\" id=\"ad-2\" style=\"--desktopHeight:250px;--mobileHeight:600px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>The financial watchdog also increased the capital buffer\u2019s range, or the policy tool to keep the country\u2019s financial stability in check, to between zero and four per cent starting February 2023, rising from the previous range of zero to 2.5 per cent.<\/p>\n<\/section>\n<div class=\"article-content__widget-group article-content__widget-group--content-slot6 article-content__widget-group--newsletter-slot\">\n<section aria-labelledby=\"FPFinance6094329227715196495329522905776128\" class=\"newsletter-widget None background--primary-light-gradient\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-aqa=\"widget-newsletter\" data-newsletter=\"single\" data-newsletter-component=\"\" data-target-list=\"FP_Finance\" data-widget=\"newsletter\"><img decoding=\"async\" alt=\"FP Finance Banner\" class=\"newsletter-widget__banner\" height=\"60\" loading=\"lazy\" src=\"https:\/\/dcs-static.gprod.postmedia.digital\/12.4.2\/websites\/images\/newsletters\/FP_Finance.svg\" width=\"97\"\/><\/p>\n<div class=\"newsletter-widget__body\">\n<div class=\"js-replace-main\">  <small class=\"newsletter-widget__disclaimer text-size--micro\"> By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300 <\/small> <\/div>\n<div class=\"js-submit-success\" hidden=\"\" id=\"submitSuccessFP_Finance\">\n<h3 class=\"newsletter__feedback--heading\">Thanks for signing up!<\/h3>\n<p class=\"newsletter-widget__text\">A welcome email is on its way. If you don&#8217;t see it, please check your junk folder.<\/p>\n<p class=\"newsletter-widget__text newsletter__feedback--last\">The next issue of FP Finance will soon be in your inbox.<\/p>\n<\/p><\/div>\n<p class=\"newsletter-widget__text js-submit-error\" hidden=\"\" id=\"submitErrorFP_Finance\"> We encountered an issue signing you up. Please try again <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p data-async=\"\">\u201cThis new level reflects our observations and high levels of systemic vulnerabilities have persisted and, in some cases, increased in recent quarters,\u201d said OSFI assistant superintendent Angie Radiskovic during a Dec. 8 press conference. \u201cCanadian household debt levels relative to income are approaching record highs, exacerbated by sharply rising debt servicing costs as interest rates have increased. While house prices have begun to decline, they remain elevated after factoring in higher mortgage rates.\u201d<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment4871305337157373965679461039865856\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment4871305337157373965679461039865856\">Advertisement 3<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-3\">\n<div class=\"ad__inner__container\" data-ad=\"[[7,7],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"7x7\" data-ad-loc=\"3\" data-ad-mobile=\"[[7,7],[300,250],[320,50],[300,50]]\" data-aqa=\"advertisement\" id=\"ad-3\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-3251840\" height=\"851\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/household-debt-.png\" width=\"1000\"\/><\/p>\n<p>Radiskovic added that highly indebted corporations are more vulnerable to economic shocks in a rising rate environment and sovereign debt levels are elevated worldwide compared to pre-pandemic levels.<\/p>\n<p>\u201cFinally, geopolitical uncertainty remains high, increasing the chance of a global slowdown that spills over into Canada,\u201d Radiskovic said.<\/p>\n<p>Also factored into OSFI\u2019s decision is stress testing various scenarios and taking into account the high-profile acquisitions some of Canada\u2019s Big Six banks have made this year. Radiskovic said banks are required to address all operations and cover all of the risks they\u2019re exposed to, which would include forward-looking statements and contingency plans in their capital planning strategy.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment3505479456903125610369552891248640\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment3505479456903125610369552891248640\">Advertisement 4<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-4\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"4\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-4\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Since the buffer was created in 2018, it has been OSFI\u2019s tool to provide a capital reserve range that applies to Canada\u2019s largest banks. During economic boom times, the reserve is built upon. When the economy hits a period that strains financial institutions, it can be drawn upon to provide support. The buffer comes on top of normal capital ratio requirements that force the banks to keep capital in reserve.<\/p>\n<p>The buffer is baked into the common equity tier 1 ratio (or the CET 1 ratio) that compares a bank\u2019s capital against its risk-weighted assets to measure its resilience in a market downturn.<\/p>\n<p>National Bank of Canada analyst Gabriel Dechaine said OSFI\u2019s move would bring the regulatory minimum CET 1 ratio up from the current rate of 10.5 per cent to 11 per cent as of February, or up to a maximum of 12 per cent given that the capital buffer range now extends to four per cent.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment2910990264441016489922101845688320\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment2910990264441016489922101845688320\">Advertisement 5<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-5\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"5\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-5\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Dechaine added that while the banks would see gradual upward pressure on their capital ratios, National Bank estimates that all the banks aside from the Bank of Montreal have a capital buffer resting well above the regulatory minimum.<\/p>\n<section aria-labelledby=\"moreTopicLabel871793597783115881810820948033536\" class=\"more-topic\" data-aqa=\"embed-more-topic\" data-carousel-component=\"\" data-carousel-icon-button=\"\" data-carousel-type=\"list\"> <button aria-hidden=\"true\" class=\"more-topic__button-prev\" data-carousel-prev=\"\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/> <\/p>\n<ol class=\"more-topic__items list-unstyled\" data-carousel-slide-list=\"\" tabindex=\"0\">\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"Sales and prices are slipping, but homes are not getting any more affordable for would-be buyers.\" class=\"lazyload\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/real-estate-vw1207.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/real-estate-vw1207.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/real-estate-vw1207.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/12\/real-estate-vw1207.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> Mortgage rates to soar higher after latest interest rate increase, but end of hiking cycle in sight <\/span> <\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"Homes for sale in East Gwillimbury, Ont.\" class=\"lazyload\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/10\/no1019housing.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/10\/no1019housing.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/10\/no1019housing.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/10\/no1019housing.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> OSFI keeping close watch on mortgage lenders as rates rise, home prices cool <\/span> <\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"The head of the Office of the Superintendent of Financial Institutions said Thursday that Canada\u2019s top banking regulator will not heed calls to loosen mortgage underwriting standards.\" class=\"lazyload\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/09\/osfi-0908.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/09\/osfi-0908.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/09\/osfi-0908.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/09\/osfi-0908.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> Banking watchdog refuses to bow to pressure to loosen mortgage standards as borrowing rates rise <\/span> <\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\">  <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"A house for sale in Toronto.\" class=\"lazyload\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/06\/no0628house.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/06\/no0628house.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/06\/no0628house.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/06\/no0628house.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"> <span class=\"more-topic__item-text-clamp\"> OSFI tightens guidelines on combined loan plans to \u2018reduce systemic risk\u2019 <\/span> <\/h3>\n<\/li>\n<\/ol>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-next\" data-carousel-next=\"\" tabindex=\"-1\" title=\"next\" type=\"button\"\/> <\/section>\n<p>\u201cBMO\u2019s capital position suddenly looks a lot weaker,\u201d Dechaine wrote in a Dec. 8 note following the news, referencing BMO\u2019s pending<br \/>US$16.3 billion Bank of the West deal.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment8566803232199734788483388601794560\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment8566803232199734788483388601794560\">Advertisement 6<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-6\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"6\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-6\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>BMO expects the deal will close within the first quarter next year, though Dechaine expects it could take a bit longer and fall into the second quarter. Should the deal close within BMO\u2019s timeline, Dechaine said the bank\u2019s pro forma CET 1 ratio for that quarter would dip to 10.5 per cent, which is below the new regulatory minimum.<\/p>\n<p>\u201cWe note that every 10 (basis points) shortfall represents $365 million of capital,\u201d Dechaine wrote. \u201cThe market could assume a larger shortfall, if factoring in typical buffers banks maintain above regulatory minimums.\u201d<\/p>\n<p>The analyst said the bank might have alternatives to raising capital, including the possibility of an arrangement with OSFI to reach the new threshold gradually.<\/p>\n<p>Canaccord Genuity analyst Scott Chan said in a Dec. 8 note to clients that National Bank has the strongest capital position with a CET 1 ratio at 12.7 per cent. Given this position, Chan expects National Bank would be able to deliver higher-than-average dividend increases.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment5071085652817654731949245940629504\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment5071085652817654731949245940629504\">Advertisement 7<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-7\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"7\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-7\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>The Bank of Canada engaged in an aggressive rate-hiking campaign over the year that brought the policy rate up 400 basis points to 4.25 per cent, prompting economists to project an economic slowdown heading into 2023.<\/p>\n<p>High household debt was an issue OSFI flagged this time last year when it maintained the capital buffer for banks at 2.5 per cent. Since then, the debt-to-income ratio moved from 177.2 per cent in the third quarter of 2021 to 181.7 per cent in this year\u2019s second quarter.<\/p>\n<p>OSFI said it would continue to monitor financial system vulnerabilities and broader economic environment, and was ready to respond through policy to minimize the impacts should these risks worsen.<\/p>\n<p data-async=\"\"><em>\u2022 Email: shughes@postmedia.com | Twitter: <a class=\"twitter-follow-button\" data-evt=\"click\" data-evt-typ=\"click\" data-evt-val=\"{\" control_fields=\"\" link=\"\" href=\"https:\/\/twitter.com\/StephHughes95\" rel=\"nofollow noopener\" target=\"_blank\">StephHughes95<\/a><\/em><\/p>\n<p> <iframe loading=\"lazy\" frameborder=\"0\" height=\"1200\" id=\"\" src=\"https:\/\/modules.wearehearken.com\/financial-post\/embed\/9353\/share\" style=\"--height: 1200px; \" width=\"\"><\/iframe> <\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt=\"beforeunload\" data-evt-typ=\"page_scroll\" data-evt-val=\"{\" control_fields=\"\">\n<h2 class=\"visually-hidden\">Share this article in your social network<\/h2>\n<\/section>\n<div class=\"article-content__ad-group\">\n<div class=\"ad__section-border ad__section-border--category visually-hidden\">\n<section aria-describedby=\"advertisment6116311892678270899398441426747392\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment6116311892678270899398441426747392\">Advertisement <\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-acceptable\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-acceptable=\"\" data-ad-loc=\"1\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-acceptable\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n<footer aria-label=\"Article Comments\" class=\"article-footer\">\n<section class=\"comments__section\" data-aqa=\"viafoura-comments\" id=\"comments\">\n<h3 class=\"widget-title comments-anchor\" id=\"comments-area\">Comments<\/h3>\n<p class=\"comments__section-disclaimer\"> Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications\u2014you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings. <\/p>\n<\/section>\n<\/footer>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>\n<br \/>OSFI raises capital buffer for big banks to 3% as household debt risks rise<\/a><br \/>\n<br \/>2022-12-08 21:17:11<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links News Finance Economy Banking Rapidly rising rate environment, geopolitical uncertainty also key risks, OSFI says Bank towers and signage in Toronto&#8217;s financial district. 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