Regulatory Alerts2023-12-20
Leverage Ratio Directive
The Supervisor of Banks issues this directive to establish a non-risk-based leverage ratio as a complementary measure to risk-based capital requirements, aiming to limit excessive leverage accumulation in the banking system. Banking corporations must maintain a minimum leverage ratio of 5 percent, or 6 percent for large institutions, calculated using Tier 1 capital as the numerator and a comprehensive exposure measure as the denominator. The directive details specific calculation methodologies for on-balance sheet assets, derivatives, security financing transactions, and off-balance sheet items, while providing a temporary reduction in minimum requirements until June 30, 2026.
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