OSFI lifts restrictions on dividend increases and share repurchases | General financial discussion | Discussion forum

This is of no benefit to GIC shoppers, of course, and could make prospects worse.

Should be good news for me, a holder of TD, RBC, BMO and BNS shares although I don't expect the dividend jump will be as large as some believe. Save some powder for 2022.

I don't know how this will change what banks are willing to pay for deposits. They simply have excess capital today that needs to be deployed in some manner (dividend increases, share buybacks, acquisitions). GIC rates are more closely tied to bond yields.

Paying out cash dividends to shareholders is a nice way to run down the bank's cash reserve.

Loonie said

I think everyone here is aware of how banks and bank shares work.  

My impression is there is a wide range of people who post on this forum, and from some comments they post, I am not so sure "everyone" here is that aware of how banks and bank shares work.

I agree with you that the OSFI action will likely have no effect on HISAs and GICs. However, holders of such still have safety and CDIC protection - so we have related the OSFI announcement to HISAs and GICs and therefore we are still on topic of HISAs, the subject of this forum.

So, I think what you are saying is that they have too much money, but this is not news. They could have been paying better interest on deposits all along, as other FIs did. I think that as far as deposits go, they are really best suited to large institutional accounts which cannot be protected by CDIC. Once in a while they have a good promo, but most of their promos are riddled with hoops and conditions that make them undesirable.

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Yet another Good thread, started by Norman. But FWIW, I think it may be misplaced.

Such threads about stocks, dividend increases and share buybacks, usually
go here ➡ https://www.highinterestsavings.ca/forum/investing/

This is Peter's Domain ... so he can make the call.

Cheerio ❗

Dean

The big banks will take all the money they can at 0.05% interest or perhaps 0.01% interest. It is cheaper than 0.2-0.25% they would have to pay elsewhere. The big banks simply have access to cheap sources of capital.

US domiciled deposit rates are even less. High yield savings account are at 0.6% or less. https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/

I have been getting 0.01% on my interest bearing chequing account at Wells Fargo for at least the past year (maybe two or more).

MFC was the first out of the gate today of the financials post-OSFI announcement with a dividend hike. I will take that one too.

I don't pay attention to US banks per se. I'd not invest in them (at least not directly - but I do indirectly by owning VTI ETF) after the financial crisis of 2008-09. Too many were way out of their league in terms of engineered products, NINJA mortgages and customer deception. Their CDs operate similarly to Canadian GICs but I never owned any when a resident of USA. In short, I don't trust US banks like I do most banks in Canada where I believe we have a far more robust regulatory system through OSFI, etc.

Bill said

I agree, Alta Red, USA banking system doesn't inspire the same confidence in me as Canadian one, i.e. Wells Fargo, sounds kind of Wild West-y, somehow Canadian Imperial Bank of Commerce sounds about as solid as you can be.  

"Never judge a book by its cover"

Just like Wells Fargo, CIBC has had its share of troubles.

Dean

Kidd said
All i read from this... bank executives get pay raises again. How pathetic is that?  

Executive compensation is always a thorn in the side of most of us. Regardless, the effect on the overall financials is pretty marginal. The banks probably spend more system wide on potted plants every year. There are other things I get more twisted off about than executive pigs at the trough.