DBRS Morningstar: OSFI Raises Domestic Stability Buffer as a Sign of Confidence

On June 17, 2021, the Office of the Superintendent of Financial Institutions (OSFI) announced an increase in the Domestic Stability Buffer (DSB) to 2.50% from 1.00% of total risk-weighted assets, effective October 31, 2021, for domestic systemically important banks (D-SIBs). The new requirement will result in a revised minimum D-SIB CET1 capital requirement of 10.5%. Additionally, the total loss-absorbing capital requirement, which will become effective on November 1, 2021, will now be 24.0% (21.5% plus 2.5% DSB).

DBRS Morningstar views the increase in the DSB as OSFI showing confidence in the economic environment and bank capitalization levels.