Federal banking regulator OSFI lowers domestic stability buffer to 3%

The big six Canadian banks are up more than 50% over the last 12 months, outperforming the closest comparable sectors. Mario Mendonca, Managing Director at TD Cowen, explores why Canadian banks are outperforming and may not be as vulnerable to credit cycles as in the past.

OTTAWA — Canada’s federal banking regulator says it’s lowering its domestic stability buffer to three per cent from 3.5 per cent, a move it says will give the country’s six largest banks greater flexibility to deploy capital.

The Office of the Superintendent of Financial Institutions says it’s the first change to the domestic stability buffer since June 2023 and takes effect today.

The regulator also narrowed the potential range of the buffer to between zero and three per cent compared with an earlier range of zero to four per cent.

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The buffer is part of the amount of money Canada’s big banks must keep on hand in case of economic shock. It applies to Canada’s six largest, or systemically important, banks. Lowering the buffer gives the banks more room to lend, potentially helping the economy.

Peter Routledge, superintendent of financial institutions, says by lowering both the level and top end of the range of the buffer, OSFI will enable the banking sector to deploy its excess capital in support of Canada’s economic adaptation to new opportunities.

The buffer is reviewed and set every June and December, but can be changed at other times if needed.

This report by The Canadian Press was first published June 19, 2026.