The head of Canada’s banking regulator will leave his post next June, choosing not to seek a second mandate after helping steer the country’s banking sector through an intense period as it responded to the fallout from the novel coronavirus.
Jeremy Rudin’s seven-year term as Superintendent of Financial Institutions expires on June 28. He has told Minister of Finance Chrystia Freeland that he will retire from public service at that time, according to the Office of the Superintendent of Financial Institutions (OSFI). Although he was eligible to be re-appointed, no superintendent has served more than one seven-year term since OSFI was created in 1987.
On Mr. Rudin’s watch, the regulator played a key role in pressing banks to build up more robust capital and liquidity buffers after the previous financial crisis in an effort to make them more resilient. And he made key decisions to help banks manage the upheaval caused by the current crisis, including freeing up some $300-billion from those capital reserves that banks could use to absorb shocks. He also granted special treatment to loans with payments deferred to make it easier for banks to give relief to hundreds of thousands of customers facing hardship in the early stages of the crisis.
But he will leave the regulator next summer in the midst of an uncertain economic recovery, at a time when banks expect losses from defaulting loans will start to rise as the effects of government stimulus and relief programs start to wear off. His successor will take on oversight of a financial sector facing renewed challenges, including persistently low interest rates and sluggish demand for new loans, on top of uncertainty about how long it will take to get COVID-19 under control.
“I am extremely proud of what OSFI has accomplished during my tenure and I thank all employees for their unwavering dedication,” Mr. Rudin, 64, said in a statement.
His first five years as superintendent were a relatively prosperous and stable period for Canada’s major banks. But challenges such as turmoil in oil and gas markets threatened to drive up losses in banks’ loan books in 2015 and 2016, as well as alternative mortgage lender Home Capital Group Inc.’s brush with insolvency in 2017.
OSFI’s efforts to ensure banks met stricter international capital standards helped build more robust shock absorbers to cushion the blow when the pandemic arrived. Canada’s major banks have maintained their dividends, continued to churn out profits and have higher capital levels than they did before the crisis, in spite of the economic damage.
The superintendent’s job is a Governor-in-Council appointment, with input from the Finance Minister, Ms. Freeland. Past superintendents have been chosen from within the regulator itself, from the Department of Finance in Mr. Rudin’s case, and from the private sector.
One possible candidate is Carolyn Rogers, the former head of OSFI’s regulation sector, who moved to Switzerland last year to take up a three-year term as secretary-general of the Basel Committee on Banking Supervision – a standard-setter for international banking regulation.
A candidate inside OSFI could be Ben Gully, who took over from Ms. Rogers as assistant superintendent of the regulation sector last year. Mr. Gully started his career at the Bank of England, and also spent two years as chief risk officer at Australia’s banking regulator, the Australian Prudential Regulation Authority.
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