The PRA has published Supervisory Statement 3/13: Capital and leverage ratios for major UK banks and building societies (SS3/13). In SS3/13, the PRA clarifies its expectations in relation to capital and leverage ratios for the eight major UK banks and building societies. These firms will be expected to meet:
- a 7% common equity tier 1 capital ratio on the definition of capital as set out in the Capital Requirements Regulation and the PRA Rulebook; and
- a 3% end-point Tier 1 leverage ratio. For the avoidance of doubt, the PRA states that the compliant Additional Tier 1 instruments may be included in the numerator, and the Basel 2014 exposure measure should be used for the denominator. The leverage ratio should be calculated on an end-of-quarter basis.