OSFI maintains the level of the Domestic Stability Buffer at 3.50% - Letter (2024)

To: Domestic Systemically Important Banks (D-SIBs)The following federally regulated financial institutions are designated as D-SIBs: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, and Toronto-Dominion Bank.

Following its semi-annual review, OSFI has decided to maintain the level of the Domestic Stability Buffer (DSB) at 3.5% of total risk-weighted assets as calculated under the Capital Adequacy Requirements (CAR) Guideline.

Over the last year, OSFI required Canada’s six largest banks to maintain more capital by increasing the DSB to 3.5% effective November 1, 2023. As such, D-SIBs continue to be expected to target a Common Equity Tier 1 ratio of at least 11.5% of total risk-weighted assets.

The decision to maintain the DSB at 3.5% reflects our current assessment that systemic vulnerabilities remain elevated and broadly stable, while near-term risks are still low but rising. In the context of increased uncertainty, we expect D-SIBs to exercise vigilance and heightened prudence in their capital management practices with a view to preserving capital.

OSFI remains committed to reviewing the DSB regularly to ensure that it contributes to the safety and soundness of Canada’s financial system while supporting public confidence. We continue to monitor financial and economic conditions and we stand ready to take further action and adjust the DSB as conditions warrant.