OSFI Lowers DSB by 50bps and Sets New Lower Upper Bound; Min. CET1 Now 11.0%

Research evidence excerpt

OSFI Lowers DSB by 50bps and Sets New Lower Upper Bound; Min. CET1 Now 11.0%

June 19, 2026 | 13:00 ET~

Canadian Banks

OSFI Lowers DSB by 50bps and Sets New Lower Upper Financial Services

Bound; Min. CET1 Now 11.0% Sohrab Movahedi Analyst

sohrab.movahedi@bmo.com (416) 359-7157

Grace MacDonald, CFA Senior AssociateBottom Line:

gracej.macdonald@bmo.com (416) 276-4635

This morning, OSFI announced (link) that the Domestic Stability Buffer (DSB) will be

Alexander M. Ponte, CFA Associatereduced by ~50bps to 3.0% of total risk-weighted-assets (RWA), alongside a reduction

alexander.ponte@bmo.com (416) 317-4763

in the upper bound of the DSB buffer range to 3.0% from 4.0%. The prior rate of 3.5%

Legal Entity: BMO Nesbitt Burns Inc.

had been in effect since November 1, 2023. The change lowers the minimum CET1 ratio

requirement for D-SIBs to 11.0% (previously 11.5%). As of Q2/26, each of the "Big 6"

Banks

banks' CET1 ratios were comfortably above this threshold, with a group consolidated 9,000

CET1 of 13.6%. 8,000

7,000

Key Points 6,000 10

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4,000 • The decision to lower the DSB, and its upper bound (a move we called for six or 9876543210 so months ago; link), is predicated on providing the Canadian banks with greater 3,000 Dec Jun Dec Jun

capacity to deploy capital through lending and investment in support of Canada's LHS: Price / RHS: Volume (mm) Source: FactSet

economy and long-term growth. The regulator added that “today’s capital

release provides an extraordinary opportunity for Canada’s six largest banks to

invest in the immense potential resident in Canada’s economy.” Additionally,

lowering the DSB upper bound is intended to provide capital planning certainty

over the medium term and reduce unintended risk aversion in lending and