{"id":51203,"date":"2024-10-02T19:20:03","date_gmt":"2024-10-02T19:20:03","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2024\/10\/02\/big-banks-fears-over-capital-rules-are-overblown-osfi-says\/"},"modified":"2024-10-02T19:20:03","modified_gmt":"2024-10-02T19:20:03","slug":"big-banks-fears-over-capital-rules-are-overblown-osfi-says","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2024\/10\/02\/big-banks-fears-over-capital-rules-are-overblown-osfi-says\/","title":{"rendered":"Big Banks&#8217; fears over capital rules are overblown, OSFI says"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header article-header--story\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\" data-aqa=\"nav-breadcrumb\">\n<p>Breadcrumb Trail Links<\/p>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\">Finance<\/li>\n<li class=\"breadcrumbs__item\">Banking<\/li>\n<li class=\"breadcrumbs__item\">News<\/li>\n<\/ol>\n<\/nav>\n<div class=\"article-header__detail\">\n<div class=\"article-header__detail__texts\">\n<p class=\"article-subtitle\">Basel capital rules are attracting unusual attention in both Canada and other countries<\/p>\n<div class=\"callout callout--noindent flex-align-center flex-justify-between\" data-evt-val=\"{\" control_fields=\"\" data-evt=\"visible\" data-evt-typ=\"element_view\"><span class=\"callout__text\"> Get the latest from Barbara Shecter straight to your inbox <\/span><button class=\"button button--icon button--primary-alt\" data-id-login-redirect=\"https:\/\/financialpost.com\/author\/bshecter\/newsletters\/\" type=\"button\"><span class=\"button__text\">Sign Up<\/span> <span aria-hidden=\"true\" class=\"button__icon\"> <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewbox=\"0 0 11 11\" width=\"11\"><polygon points=\"1.1 0 7 6 1.1 12 0 10.9 4.8 6 0 1.1\"\/><\/svg> <\/span><\/button><\/div>\n<div class=\"article-meta\">\n<p><span class=\"published-date__since\">Published Oct 02, 2024<\/span> \u00a0\u2022\u00a0 <span class=\"updated-date__since\">Last updated 3\u00a0hours ago<\/span> \u00a0\u2022\u00a0 <span class=\"published-date__word-count\">4 minute read<\/span><\/p>\n<div class=\"article-meta__bottom\">\n<div class=\"bookmark-wrapper\">\n<div class=\"popover\" data-aqa=\"popover\" data-click-to-appear=\"True\" data-container=\"\" data-container-offset=\"\" data-no-style=\"\" data-popover-component=\"\" data-position=\"top\" data-sticky=\"\" data-tail-offset=\"200\" data-tail-position=\"right\"><button class=\"popover__trigger bookmark-button\"><span class=\"save-article-button save-article-button--default\" title=\"Save article\" data-article-id=\"6107b3fb-4c74-447f-ad3d-b1ddab8eeb38\" data-evt-skip-click=\"true\"\/><\/button><\/p>\n<div aria-describedby=\"popover-desc-popover-bookmark\" class=\"popover__content\" hidden=\"\" role=\"dialog\">\n<div class=\"popover__content__wrapper\">\n<div class=\"popover__content__text\" id=\"popover-desc-popover-bookmark\">\n<div class=\"bookmark__popover__content\">\n<p>You can save this article by registering for free here. Or sign-in if you have an account.<\/p>\n<\/div>\n<\/div>\n<p><button class=\"popover__content__close\" data-evt-skip-click=\"true\" title=\"Close\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\" viewbox=\"0 0 12 12\" class=\"icon--close\" height=\"12\" version=\"1.1\" width=\"12\"><polygon points=\"12 0.95 11.05 0 6 5.05 0.95 0 0 0.95 5.05 6 0 11.05 0.95 12 6 6.95 11.05 12 12 11.05 6.95 6\"\/><\/svg><\/button><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/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\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=564&amp;h=423&amp;type=webp&amp;sig=W_8Fh7AdMh3B81toFII6xA,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=1128&amp;h=846&amp;type=webp&amp;sig=Uf2K6cuXALdF_QCbyxcxqA 2x\" type=\"image\/webp\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=564&amp;h=423&amp;type=jpg&amp;sig=oshzQm82_VH0Z3Bc-QLOGg,&#10;                https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=1128&amp;h=846&amp;type=jpg&amp;sig=SobsL_iTdpp9QPj-Rx_CRQ 2x\" type=\"image\/jpeg\"><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=472&amp;h=354&amp;type=webp&amp;sig=pAMnnoU7XKiGLkWLaoUnhg,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=944&amp;h=708&amp;type=webp&amp;sig=2JHadzcCzr84PHDUljEa2A 2x\" type=\"image\/webp\"><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=472&amp;h=354&amp;type=jpg&amp;sig=_uQXf5JRgczKPwmEhCZB0A,&#10;                https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=944&amp;h=708&amp;type=jpg&amp;sig=gUfNwLMNPAExwUYUKLnQNQ 2x\" type=\"image\/jpeg\"><source media=\"(max-width: 767px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=288&amp;h=216&amp;type=webp&amp;sig=GlCvQ2s1mw-34QudncQ0Pg,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/10\/1003-bc-ofsi.jpg?quality=90&amp;strip=all&amp;w=576&amp;h=432&amp;type=webp&amp;sig=m5d2NQZ6BEunTbMpN-z6xA 2x\" type=\"image\/webp\"><\/source><\/source><\/source><\/source><\/source><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">The Canadian flag blows in the wind in the heart of the financial district in Toronto on June 27, 2018.<\/span> <span class=\"credit\">Photo by THE CANADIAN PRESS\/Tijana Martin<\/span><\/figcaption><\/figure>\n<\/div>\n<\/header>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p data-async=\"\"><span>Canada\u2019s chief banking regulator says fears about lopsided implementation of post-financial-crisis capital rules and dire warnings about curtailed lending and hits to the Canadian economy are overblown.<\/span><\/p>\n<p data-async=\"\"><span>In a speech at a conference Wednesday in Toronto, Peter Routledge, head of the Office of the Superintendent of Financial Institutions, said that contrary to the prognostications, new capital floor rules are not expected to have a material impact on capital at the country\u2019s largest six banks.<br \/><\/span><\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_2\">\n<section aria-describedby=\"advertisment5810119076578798512321838543011840\" class=\"ad\">\n<p>Advertisement 2<\/p>\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\" 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in to continue with your reading experience.<\/p>\n<ul class=\"list-unstyled list-checkmark\">\n<li>Access articles from across Canada with one account<\/li>\n<li>Share your thoughts and join the conversation in the comments<\/li>\n<li>Enjoy additional articles per month<\/li>\n<li>Get email updates from your favourite authors<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/header>\n<div class=\"identity-screen m-x-0 p-x-0 col-xs-12 col-md-6 flex-justify-center flex-align-center\" aria-live=\"assertive\">\n<section class=\"sail\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-sailthru-personalization-engine=\"\" data-sailthru-personalization-engine-component=\"\"\/>\n<div class=\"m-x-0 p-x-0 col-xs-12 col-sm-6 col-md-12 flex-align-justify-center\" data-auth-component=\"\" id=\"auth-screen-form\">\n<div class=\"identity-screen-form--active w-full flex-align-justify-center\">\n<div class=\"identity-screen-form identity-screen__content w-full\">\n<h2 class=\"blocker-title\">Sign In or Create an Account<\/h2>\n<p><span class=\"identity-divider__line\"\/><span class=\"identity-divider__text\">or<\/span><span class=\"identity-divider__line\"\/><\/p>\n<\/div>\n<\/div>\n<\/div>\n<footer class=\"identity-footer identity-screen__content m-x-0 p-x-0 col-sm-6 col-md-12\"\/><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p><span>\u201cBased on our estimates, the implementation of the 2017 Basel III reforms in Canada is expected to be capital neutral,\u201d Routledge, OSFI\u2019s superintendent, told the audience at the Global Risk Institute\u2019s Summit 2024.<\/span><\/p>\n<p data-async=\"\"><span>He said the final Basel capital rules, sometimes referred to as Basel Endgame, are attracting unusual attention, both at home at in other countries, some of which are either delaying implementation or watering down provisions agreed to eight years ago.<\/span><\/p>\n<p><span>As a result of the uncertainty, OSFI announced it would delay by one year its final implementation of the capital floor rules, which are aimed at ensuring internal risk models at the banks don\u2019t stray too far from a standardized approach.<\/span><\/p>\n<p><span>\u201cWe were not alone in attracting this attention,\u201d Routledge said. \u201cIn a neighbouring country, earlier this year one could find a great deal of public attention on the 2017 Basel III reforms, most peculiarly on television advertisements and airport billboards.\u201d<\/span><\/p>\n<p data-async=\"\"><span>A flurry of lobbying in the United States appeared to pay off for banks there, with the United States Federal Reserve signalling last month that it is considering cutting previously announced increases for bank capital cushions in half.<\/span><\/p>\n<\/section>\n<div class=\"js-widget-content article-content__widget-group article-content__widget-group--content-slot16 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Weekdays by 9 a.m.<\/p>\n<\/div>\n<\/div>\n<div class=\"newsletter-widget__body__new-story-page\">\n<div class=\"js-replace-main__new-story-page\">\n<p class=\"newsletter-widget__disclaimer__new-story-page text-size--tiny\">By signing up you consent to receive the above newsletter from Postmedia Network Inc.<\/p>\n<\/div>\n<div class=\"js-submit-success\" hidden=\"\" id=\"submitSuccessFP_ExecSummary\">\n<p>Thanks for signing up!<\/p>\n<p class=\"newsletter-widget__text__new-story-page\">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__new-story-page newsletter__feedback--last\">The next issue of Posthaste will soon be in your inbox.<\/p>\n<\/div>\n<p class=\"newsletter-widget__text__new-story-page js-submit-error\" style=\"margin-top: 8px\" hidden=\"\" id=\"submitErrorFP_ExecSummary\">We encountered an issue signing you up. Please try again<\/p>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_3\">\n<section aria-describedby=\"advertisment4500130283411694081897123612196864\" class=\"ad\">\n<p>Advertisement 3<\/p>\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<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p><span>Still, Routledge noted in his speech, a number of regulators in the 20 participating countries, have \u201cre-affirmed their intent to fully meet their commitments to the 2017 Basel III reforms,\u201d albeit with timelines that now extend to the later years of this decade and the early years of the next.<span class=\"Apple-converted-space\">\u00a0<\/span><\/span><\/p>\n<p><span>He said OSFI will probably not have more to say on the timeline for Canada\u2019s big banks to adhere to the capital floor until next summer but pledged not to extend Canada\u2019s lead on the implementing rules further in a way that would lead to inconsistency in the application of rules meant to improve stability of the global financial system following the 2008 crisis.<span class=\"Apple-converted-space\">\u00a0<\/span><\/span><\/p>\n<p><span>Routledge said OSFI welcomes challenges to ensure well-intentioned efforts to enhance the resilience of the Canadian banking sector does not lead to unintended consequences, but he rejected the argument that the final Basel rules will cause a dramatic increase in capital requirements, slow lending and have a negative impact on the Canadian economy.<\/span><\/p>\n<p><span>To bolster his contention, he said the regulator crunched the numbers including information disclosed by Canada\u2019s six largest banks in the second quarter and publicly available regulatory data, which slows the estimated increase in risk-weighted assets due to fully phased-in capital floor rules to be about $85 billion. Using this figure, the impact on the banks\u2019 capital ratios would range from zero to 86 basis points.<\/span><\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_4\">\n<section aria-describedby=\"advertisment9813757631592545274468737004601344\" class=\"ad\">\n<p>Advertisement 4<\/p>\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<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p><span>\u201cIn other words, the capital floor impact \u2026 is many multiples lower than some estimates and is negligible on a net basis,\u201d Routledge said.<\/span><\/p>\n<section aria-labelledby=\"moreTopicLabel6226392555238149169250035950419968\" class=\"more-topic\" data-aqa=\"embed-more-topic\" data-carousel-component=\"\" data-carousel-icon-button=\"\" data-carousel-type=\"list\">\n<p>Recommended from Editorial<\/p>\n<p><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 data-evt-val=\"{\" control_fields=\"\" mortgage=\"\" shakeup=\"\" a=\"\" bonanza=\"\" for=\"\" homeowners=\"\" data-carousel-item=\"\" data-evt=\"click\" data-evt-typ=\"click\"> <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"Single family houses under construction in Delta, B.C.\" data-src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/no0926housing.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=ay7s6InKs_olEd4NEeQAAA\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/no0926housing.jpg?h=96&amp;strip=all&amp;quality=5&amp;sig=uGmYt4iBl_mGEln7GbO48Q\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/no0926housing.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=ay7s6InKs_olEd4NEeQAAA, https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/no0926housing.jpg?h=192&amp;strip=all&amp;quality=80&amp;sig=cyeqNDfyLzXIz95XR2gunQ 2x,&#10;                                             https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/no0926housing.jpg?h=288&amp;strip=all&amp;quality=80&amp;sig=q6W2AO-rOEFbWz-g4S5zHg 3x\" class=\"lazyload\" height=\"96\" loading=\"lazy\" width=\"96\"\/><\/picture>\n<p><span class=\"more-topic__item-text-clamp\">Ottawa&#8217;s mortgage shakeup a bonanza for homeowners<\/span><\/p>\n<\/li>\n<li data-evt-val=\"{\" control_fields=\"\" relents=\"\" on=\"\" stress=\"\" tests=\"\" for=\"\" uninsured=\"\" mortgages=\"\" data-carousel-item=\"\" data-evt=\"click\" data-evt-typ=\"click\"> <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"Industry players had complained about the imbalance that required the stress test to be applied again when changing banks but not when remaining with the same financial institution at renewal time.\" data-src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/mortgage-stree-test-1.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=Rwpc8dHZnw_z1xDOZz0-Ug\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/mortgage-stree-test-1.jpg?h=96&amp;strip=all&amp;quality=5&amp;sig=6nQQ-0EIMkBMjxphHuz_-w\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/mortgage-stree-test-1.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=Rwpc8dHZnw_z1xDOZz0-Ug, https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/mortgage-stree-test-1.jpg?h=192&amp;strip=all&amp;quality=80&amp;sig=ueQTdVb16FJTtM5Fv34cCQ 2x,&#10;                                             https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2024\/09\/mortgage-stree-test-1.jpg?h=288&amp;strip=all&amp;quality=80&amp;sig=scGDWhIqNj3vr7tY_LkGgg 3x\" class=\"lazyload\" height=\"96\" loading=\"lazy\" width=\"96\"\/><\/picture>\n<p><span class=\"more-topic__item-text-clamp\">OSFI relents on stress tests for uninsured mortgages<\/span><\/p>\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><span>He defended the emphasis on banks holding excess capital to ensure their stability to withstand economic shocks. But he said the idea is to find an \u201coptimum\u201d level \u2014 \u201cone that lessens the likelihood that a financial shock damages the economy but avoids the<span class=\"Apple-converted-space\"> <\/span><\/span><span>\u2018stability of the graveyard\u2019 in which economic growth is unnecessarily slowed by an excessive aversion to financial system risk.\u201d<\/span><\/p>\n<p>Routledge stood by the intention of the Basel capital floor rules, saying they will cause banks to \u201cmore regularly investigate, challenge, and improve the assumptions in their internal models\u201d and reduce differences in capital requirements for banks using internal models and those using standardized approaches to risk-weighting.<\/p>\n<p>\u201cThis will tend to add competitive balance, all else equal, which will ultimately benefit Canadian businesses and households looking to finance their futures,\u201d he said.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_5\">\n<section aria-describedby=\"advertisment1403269261269424010199577323896832\" class=\"ad\">\n<p>Advertisement 5<\/p>\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<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p data-async=\"\"><span>After his speech, Routledge addressed OSFI\u2019s recent decision that will relax stress testing by allowing homeowners renewing uninsured mortgages to switch financial institutions without facing a new stress test, something they wouldn\u2019t need if they stayed with their bank.<\/span><\/p>\n<p><span>He said<\/span><span> 95 of Canadians don\u2019t switch their bank on mortgage renewal, so the change isn\u2019t likely to shake the stability of the system. Moreover, he said, requiring the new financial institution to stress test a borrower who had already been stress tested left some Canadians \u2014 particularly those with variable rate, fixed payment mortgages \u2014 feeling like they would be barred from getting a mortgage.<\/span><\/p>\n<p><span>\u201cThat did make a difference in our decision making, even though it was only going to be a limited number of Canadians. I don\u2019t think that that\u2019s OSFI\u2019s role,\u201d Routledge said, noting that the agency regulates financial institutions, not individuals, and must be cautious not stray outside its mandate.<\/span><\/p>\n<p><span>Many market players including the federal Competition Bureau had called on OSFI to make the change. The regulator initially pushed back, suggesting the new financial institution should not rely on the underwriting of the previous one when taking on the mortgage loan.<\/span><\/p>\n<p data-async=\"\"><em>\u2022 Email: bshecter@postmedia.com<\/em><\/p>\n<p data-async=\"\"><em><strong>Bookmark our website and support our journalism:<\/strong> Don\u2019t miss the business news you need to know \u2014 add financialpost.com to your bookmarks and sign up for our newsletters here.<\/em><\/p>\n<\/section>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt-val=\"{\" control_fields=\"\" data-evt-typ=\"page_scroll\">\n<p>Share this article in your social network<\/p>\n<\/section>\n<\/div>\n\n<br \/>Big Banks&#8217; fears over capital rules are overblown, OSFI says<\/a><br \/>\n<br \/>2024-10-02 19:20:03<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links Finance Banking News Basel capital rules are attracting unusual attention in both Canada and other countries Get the latest from Barbara Shecter straight to your inbox Sign&#8230;<\/p>\n","protected":false},"author":2,"featured_media":51204,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-51203","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/51203","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=51203"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/51203\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/51204"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=51203"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=51203"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=51203"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}