Christine Dobie
(Bloomberg) — Canada’s banking regulator is proposing to loosen capital rules for certain corporate and real estate loans in an effort to spur more business investment in the country.
The Office of the Superintendent of Financial Institutions on Thursday launched a 90-day public consultation on proposed changes to credit risk capital requirements. It said the aim was to better align rules with actual risks while freeing up bank balance sheets to “expand credit and support growth”.
Key changes include lower risk weights for small and medium-sized enterprise loans as well as low-rise residential real estate projects, which OSFI considers to be relatively low-risk. This will reduce the amount of capital that lenders must hold against such loans, making it easier for banks to extend credit.
Director Peter Routledge has argued for updating capital rules, saying they can impact economic outcomes even if they are not a “magic bullet.” He questioned whether current risk weightings would discourage lending to businesses compared with mortgages.
Last month he noted that banks typically hold about 10% of capital for uninsured residential mortgages, compared with 50% to 60% for commercial loans. “It does make one wonder: To what extent does the way we allocate bank capital drive economic decisions, and do those decisions contribute to Canada’s long-term prosperity and productivity?” he told the Economic Club of Canada.
The federal government cited OSFI’s program in a section titled “Unleashing Capital” in its budget released earlier this month, noting that banks play a key role in promoting Canada’s economic growth.
—With help from Melissa Shin.
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Bloomberg Capital Requirements Capital Rules Christine Dobby Office of the Superintendent of Financial Institutions OSFI Peter Routledge Public Consulting Regulators
Last modified: November 20, 2025
