Bank of England: Implementing a UK leverage ratio framework

10 July 2015

First consultation paper sets out how the PRA proposes to implement the Financial Policy Committee’s Direction and Recommendation on a UK leverage ratio framework. PRA statement on housing tools sets out the PRA’s intended implementation approach to FPC Directions on housing tools.

Implementing a UK leverage ratio framework

The consultation sets out the PRA’s proposed approach in relation to the implementation of a domestic leverage ratio framework and its key components, such as scope of application, minimum leverage ratio requirement, leverage ratio buffers, definitions and reporting and disclosure requirements.

To enable the framework to be fully effective in promoting safety and soundness of firms, the PRA proposes to require firms in scope to report and disclose an averaged leverage ratio by applying daily averaging to on-balance sheet exposures and monthly averaging to the capital measure and off-balance sheet exposures. The PRA proposes a transitional period of twelve months for firms to comply with the averaging requirement.

The PRA proposes that the framework should come into force on 1 January 2016.

The appendices in the CP set out:

• Appendix 1 – proposed rules on the UK minimum leverage ratio and buffers
• Appendix 2 – proposed rules on UK leverage ratio reporting
• Appendix 3 – proposed rules on UK leverage ratio disclosures
• Appendix 4 - a draft supervisory statement setting out the PRA’s expectations in relation to the application of the UK leverage ratio framework
• Appendix 5 - a draft supervisory statement setting out the basis on which firms would be expected to report leverage ratio information required under the UK leverage ratio framework.
• Appendix 6 – proposed reporting template FSA083 leverage ratio
• Appendix 7 – proposed transitional reporting template FSA084 leverage ratio - transitional

This consultation closes on Monday 12 October 2015.

Consultation paper

 

PRA statement on housing tools

On 10 July 2015 the PRA set out its intended implementation approach to FPC Directions on loan to value and debt to income ratio limits in the housing market.

The PRA welcome any comments by Monday 12 October 2015.

Full statement

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