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In the EU, the minimum bank leverage ratio is the same 3% as required by Basel III. [17] The UK requires a minimum leverage ratio, for banks with deposits greater than £50 billion, of 3.25%. This higher minimum reflects the PRA's differing treatment of the leverage ratio, which excludes central bank reserves in 'Total exposure' of the calculation.
Following the financial crisis of 2007–2008, the Basel III reforms were published in 2010/11. The standards set new definitions of capital, higher capital ratio requirements, and a leverage ratio requirement as a "back stop" measure.
The Basel Committee describes these changes as completing the Basel III reforms, published in 2010–11, [2] and calls them "finalised Basel III post-crisis reforms". [3] These remaining reforms to prudential regulation of banks are known by various names in BCBS member jurisdictions (often including other Basel III reforms that remain to be ...
Randall Kroszner, a former Federal Reserve governor who chaired the Committee on Supervision and Regulation of Banking Institutions during the GFC, fears Basel III Endgame will have more costs ...
Under Basel III, banks are expected to maintain a leverage ratio in excess of 3%. The ratio is defined as . Here the exposure is defined broadly and includes off-balance sheet items and derivative "add-ons", whereas Tier 1 capital is limited to the banks "core capital". See Basel III § Leverage ratio
The adoption of the Basel II guidelines in 2004 was followed at EU level by a recast of the Banking Directive on the one hand (Directive 2006/48/EC) and the Capital Adequacy Directive (Directive 93/6/EEC) on the other hand (Directive 2006/49/EC). These two Directives were officially adopted on 14 June 2006 and published in the Official Journal ...
In addition to changes in capital requirements, Basel III also contains two entirely new liquidity requirements: the net stable funding ratio (NSFR) and the liquidity coverage ratio (LCR). On October 31, 2014, the Basel Committee on Banking Supervision issued its final Net Stable Funding Ratio (it was initially proposed in 2010 and re-proposed ...
In implementing the Basel III agreement within the EU, capital, liquidity and the leverage ratio were considered, covering the whole balance sheet of the banks. [1] In addition to Basel III implementation, the package introduces a number of important changes to the banking regulatory framework. The following is added to the Directive: