Additional Leverage Ratio Buffer Model Requirements

We have published Leverage Voluntary Requirements (VREQ) applications for global systematically important institutions (G-SIIs) and institutions subject to a systemic risk buffer (SRB)

First published in December 2015

As stated in Supervisory Statement (SS) 45/15 ‘The UK leverage ratio framework’, global systemically important institutions (G-SIIs) and firms subject to an other systemically important institutions (O-SII) buffer 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 O-SII buffer 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 us immediately and prepare a capital plan and submit it to us.

Current version

Published on 9 December 2020. Effective from 11.00pm 31 December 2020.

We published the ‘Additional Leverage Ratio Buffer Model Requirements’, which replaces the previous ‘Additional Leverage Ratio Buffer Model Requirements’ from 11pm Thursday 31 December 2020. The changes mirror the EU exit related amendments to the Leverage Ratio framework, which we consulted on in Consultation Paper (CP) 13/20 ‘UK withdrawal from the EU: Changes before the end of the transition period’. They are in respect of the level of application provisions, and match the changes to Chapter 2 (Basis of Application) of the Leverage Ratio Part of the Rulebook.

As described in PS26/20 (Capital Requirements Directive V (CRD V)), the PRA has exercised its own initiative powers under s55M(3) and s55Y(4) FSMA to implement the changes to (i) the Capital Buffers and Pillar 2A Model Requirement and (ii) the Additional Leverage Ratio Buffer Model Requirements, as well as, for those firms subject to it, to replace references to the Systemic Risk Buffer with references to the O-SII Buffer. All firms have received Own Initiative Requirement notices from December 2020 to that effect. The text of the current Capital Buffers and Pillar 2A Model Voluntary Requirement (VREQ) and Additional Leverage Ratio Buffer Model Requirements is available on the Bank of England website.

Past versions

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