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Canada to introduce new stricter bank capital rules

TORONTO, Jan 9 (Reuters) - Canada's banking regulator said on Tuesday it would introduce new capital rules stricter than those proposed by global regulators to ensure banks can withstand financial shocks.

The Office of the Superintendent of Financial Institutions said the changes were designed as an interim step before new global rules are phased in from 2022.

The regulator said it would replace the current capital output floor used by Canada's banks with the Basel 2 floor, calibrated at 75 percent. That compares with a floor of 72.5 percent agreed by global regulators in December.

Global regulators agreed in December that banks could use their own models to calculate how much risk is on their books. A 72.5 percent floor means that banks can only vary from a standard model by no more than 27.5 percent. Canada's regulator is proposing banks can only deviate by 25 percent. (Reporting by Matt Scuffham; Editing by Richard Chang)