OSFI calls for prudence related to normal course issuer bids

Canadian financial institutions that have normal course issuer bids in place should consult with Canada’s solvency regulator, the Office of the Superintendent of Financial Institutions (OSFI), before repurchasing shares pursuant to those bids, the regulator notes in an advisory.
OSFI says it believes the current environment calls for increased conservatism in capital management.
The practice should continue until the advisory is withdrawn, OSFI notes.
Most Canadian banks and insurance companies have authorized normal course issuer bids in place. These plans are part of the company’s ongoing capital management process and require approval from OSFI.
Normal course issuer bids usually have a one-year term for efficiency reasons, OSFI notes.
“Notwithstanding OSFI’s approval of an institution’s normal course issuer bid, OSFI expects that prudent capital management practices will be applied at all times and that the timing of repurchases under those programs, as well as the amount of shares being repurchased, would be consistent with such prudent practices,” OSFI writes. “Currently, shares are not generally being repurchased.”