In response to the ongoing economic shock from Covid-19 we intend, with the support of the Financial Policy Committee (FPC), to extend our decision to maintain firms’ Other Systemically Important Institutions (O-SII) buffer rates at 2019 levels for a further year.
In December 2020, we announced our intention to maintain rates at 2019 levels and to set no new O-SII buffer rates until December 2022footnote . Our aim was to aid firms in their capital planning by taking pressure off end-2020 balance sheets, upon which the December 2021 rate assessment would have been based. This was in line with our commitment in April 2020 to take into account the how firms’ balance sheets have grown in response to Covid-19 and the extent to which they are temporarily inflated.
Our intention now is that rates should be maintained for a further year at 2019 levels, with no new rates set until December 2023. We are required to review O-SII buffer rates once a year, but barring an unforeseen change in circumstances, we do not currently expect the 2022 review to result in any changes. This should take pressure off end-2021 balance sheets (which would otherwise form the basis of the 2022 rate assessment).
We expect to reassess O-SII buffer rates again in December 2023. We will do this in line with our statement of policyfootnote  and the FPC frameworkfootnote , and we will continue to take into consideration the evolution in firms’ balance sheets in response to Covid-19footnote . Any decision on O-SII rates taken in December 2023 will be based on end-2022 financial results and will take effect from January 2025 in line with our policy.
We also reiterate our expectation that all elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this shock.
FPC proposal to revise its O-SII buffer framework
In its Q3 Record, published today, the FPC has announced its intention to consult on a proposal to change the metric used to determine O-SII buffer rates from total assets to the UK leverage exposure measure.
If the FPC’s proposal is adopted, we will first assess rates under a revised framework in December 2023 based on end-2022 financial results. This means that the rates will be maintained at 2019 levels until the revised FPC framework can take effect.
Taken together, the FPC’s proposal and this statement should give firms clarity for capital planning and lending decisions, and allow firms time to adapt to the proposed changes should they be implemented.
The decision is relevant only to RFBs and large building societies that will be subject to the O-SII Buffer.footnote 
Only firms with greater than £175bn in total assets face a non-zero O-SII buffer rate