Office of the Superintendent of Financial Institutions
In March, OSFI
announced and more recently the Superintendent
confirmed the expectation that institutions not increase regular dividends, undertake common share buybacks or raise executive compensation. Such capital distributions remain inappropriate at this time to ensure institutions have adequate capital to cushion the impacts of shifts in the economy during an unprecedented time.
OSFI maintains its commitment that any regulatory or supervisory adjustments made in response to the pandemic be
credible, consistent, necessary and fit-for-purpose. There remains too much uncertainty to change our expectation on regular dividends. While conditions seem stable now, the financial impacts of the COVID-19 pandemic are yet to be fully realised. That is why the existing restrictions on certain capital distributions remain appropriate in this uncertain environment.
Through our ongoing monitoring and supervisory work, OSFI has concluded that there may be exceptional circumstances where a non-recurring payment of special, or irregular, dividends may be acceptable. Under all circumstances, OSFI’s intention is to protect institutions' creditors, depositors, or policyholders while allowing institutions to compete and take reasonable risks.
The following principles guide the limited circumstances under which OSFI will consider exceptions for non-recurring special / irregular dividends. Each request will be reviewed individually and in context with the institution’s risk profile.
Further details can be found in OSFI’s Frequently Asked Questions for federally regulated
deposit-taking institutions and
Consistent with our mandate, OSFI recognizes that institutions must be able to compete effectively and take reasonable risks. In this regard, we further recognize that the risks individual institutions face related to COVID-19 may also vary. OSFI is committed to continuing to review, adjust and communicate our guidance and expectations as circumstances warrant.