On 17 September 2020, the European Central Bank (ECB) announced that euro area banks under its direct supervision may exclude certain central bank exposures from the leverage ratio. The announcement comes after the Governing Council of the ECB confirmed that there are exceptional circumstances due to the COVID-19 pandemic.
Banks under ECB supervision can benefit from this exclusion when they communicate their leverage ratios. Based on end-March 2020 data, this exclusion would raise the aggregate leverage ratio of 5.36% by about 0.3 percentage points. The 3% leverage ratio requirement will become binding on 28 June 2021 but banks are already required to disclose their current leverage ratio.
Banks supervised by the ECB may benefit from this measure until 27 June 2021. ECB banking supervision would have to take a new decision should it wish to further extend the exclusion beyond June 2021, when the 3% leverage ratio requirement will become binding. This would require an upward recalibration of the 3% leverage ratio requirement.