The UK leverage ratio framework

Supervisory Statement 45/15

Update 14 November 2018

This SS was updated following publication of Policy Statement 28/18 ‘UK leverage ratio: Applying the framework to systemic ring-fenced bodies and reflecting the systemic risk buffer’ (see Annex for details).

Update 14 November 2018 - Leverage Voluntary Requirements (VREQ) applications for G-SIIs and institutions subject to a SRB (effective from 1 January 2019)

The PRA published the ‘Additional Leverage Ratio Buffer Model Requirements’, which replaces the previous ‘Additional Leverage Ratio Buffer Model Requirements for G-SIIs’ from 1 January 2019. As stated in the updated Supervisory Statement 45/15, global systemically important institutions (G-SIIs) and firms subject to a systemic risk buffer (SRB) 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 an Additional Leverage Ratio Buffer (ALRB) based on either the G-SII buffer or SRB as applicable and the associated reporting and disclosure requirements. If a firm 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 ALRB, the firm 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 and UK institutions subject to a SRB which they are expected to sign and return. These firms should read their application form in conjunction with the requirements set out in the document below.

PDFAdditional Leverage Ratio Buffers Model Requirements 

Update 17 December 2015 - 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.

PDF Additional Leverage Ratio Buffers Model Requirements for G-SIIs 

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.

Current version

Published: 7 December 2015

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