On 1 July 2015, the Financial Policy Committee (FPC) directed the Prudential Regulation Authority (PRA) to implement a UK leverage ratio framework. On 10 July 2015 the PRA published Consultation Paper (CP) 24/15: ‘Implementing a UK leverage ratio framework’ setting out how the PRA intended to meet the FPC’s direction. This policy statement (PS) provides feedback to responses to the CP. It sets out the changes made to the rules and supervisory statements proposed in the CP. This PS is relevant to PRA-regulated banks and building societies with retail deposits equal to or greater than £50 billion on an individual or a consolidated basis.
The PRA considers that, in line with its statutory obligations, this framework will address the risk of excessive leverage for the group of firms that are the most systemically important in terms of size and critical services provided to the UK economy, whose individual failure could cause adverse effects on the stability of the UK financial system.
The PRA received nine written responses to the CP. In light of the responses received the PRA has chosen to extend the transition period for daily averaging disclosure requirements by 12 months.
Structure of the PS
This PS broadly follows the same chapter structure as the CP. Where relevant, each section includes:
- the approach taken on the most significant issues raised by respondents, in particular noting those areas where the PRA is making changes to the proposals contained in the CP; and
- clarification where the PRA considers it appropriate to use this PS to clarify issues of uncertainty raised in responses to the CP.
The appendices include links to final rules, one updated and two new supervisory statements, and templates for data items FSA083 and FSA084. Firms wishing to use XSD templates for reporting should get in touch with their usual supervisory contact.
Implementing a UK leverage ratio framework - PS27/15
PRA Rulebook CRR Firms: Leverage Ratio (PRA 2015/89)
PRA Rulebook CRR Firms: Reporting Leverage Ratio (PRA 2015/90)
PRA Rulebook CRR Firms: Public Disclosure (Leverage Ratio Amendment) (PRA 2015/91)
The UK leverage ratio framework – SS45/15
UK leverage ratio: instructions for completing data items FSA083 and FSA084 – SS46/15
Templates for data items FSA083 and FSA084 and instructions
Capital requirements for major UK banks and building societies – SS3/13 UPDATE