Financial Policy Committee announces new leverage ratios for banks
31 October 2014
David Strachan, Deloitte Centre for Regulatory Strategy Co-Leader, said:
“The FPC’s recommendation for a minimum leverage ratio of around 4% for the largest UK G-SIBs and ring-fenced banks came out close to most industry expectations, although considerably lower than some. Moreover, the overall package is simpler than in the previous consultation, with the suggestion of a “leverage ratio buffer” being dropped.
“While today’s announcement provides a very important missing piece of the capital jigsaw, the picture is by no means complete. The Financial Stability Board’s proposals for Total Loss Absorbing Capacity are due early next month and the Bank of England will consult on the “PRA buffer” in January. In addition, both the Basel Committee and the EU Commission are due to review aspects of the leverage ratio in coming years, and further changes may follow. So it will still be some time before the overall capital requirements for the major UK banks are fully specified and an assessment can be made of their aggregate impact.”
Notes to editors
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