Update 17 December - Leverage Voluntary Requirements (VREQ) applications for G-SIIs
On 17 December, the PRA published the ‘Additional Leverage Ratio Buffer Model Requirements for G-SIIs’. As stated in Supervisory Statement 45/15, global systemically important institutions (G-SIIs) to which the UK leverage ratio framework applies will be invited to apply for a voluntary requirement (VREQ) under section 55M of the Financial Services and Market Act (2000). The VREQ would include a G-SII Additional Leverage Ratio Buffer (ALRB) and the associated reporting and disclosure requirements. If a G-SII does not hold, or is not likely to hold, an amount and quality of Common Equity Tier 1 (CET1) capital that is equal to or greater than the G-SII ALRB, the firms to which the VREQ applies will be required to notify the PRA immediately and prepare a capital plan and submit it to the PRA. The PRA will soon be sending VREQ application forms to UK G-SIIs which they are expected to sign and return. G-SIIs should read their application form in conjunction with the requirements set out in the document below.
This supervisory statement (SS) is aimed at Capital Requirements Regulation (CRR) firms in scope of the UK leverage ratio framework. The purpose of this SS is to set out the expectations of the Prudential Regulatory Authority (PRA) on leverage ratio buffers and the reporting and disclosure of an averaged leverage ratio, as well as to provide some clarification on the PRA rules. It should be read alongside the Leverage Ratio, Reporting Leverage Ratio and Public Disclosure Parts of the PRA Rulebook. This statement complements the PRA’s rules in implementing the FPC’s Direction and Recommendation with regard to a UK leverage ratio framework.
The UK leverage ratio framework - SS45/15