By Christine Dobby
(Bloomberg) — Canada’s banking regulator is proposing to ease capital rules for certain corporate and real estate loans, aiming to fuel 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 capital requirements for credit risk. The goal, it said, is to better align rules with actual risks while freeing up bank balance sheets to “extend credit and support growth.”
Key changes include lowering the risk weighting for loans to small- and medium-size businesses as well as for low-rise residential real estate projects, which OSFI views as relatively low risk. That would reduce the amount of capital that lenders must hold against such loans, making it easier for banks to offer credit.
Superintendent Peter Routledge has been advocating for updates to capital rules, saying they can influence economic outcomes even if they’re not a “silver bullet.” He’s questioned whether current risk weights discourage lending to business compared with mortgages.
Last month he noted that banks typically hold capital of about 10% against uninsured residential mortgages, versus 50% to 60% for business loans. “It does cause one to wonder: To what extent is the way we allocate bank capital driving economic decisions and are those decisions helpful to the long-term prosperity and productivity for Canada?” he told the Economic Club of Canada.
The federal government referenced OSFI’s plans in its budget announcement earlier this month under a section titled “unlocking capital,” noting banks’ key role in boosting Canada’s economic growth.
–With assistance from Melissa Shin.
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Last modified: November 20, 2025