On 12 November 2025, the Prudential Regulation Authority (PRA) issued Policy Statement 22/25 – Leverage Ratio: Changes to the retail deposits threshold for application of the requirement (PS22/25).

Background

Earlier this year the PRA issued Consultation Paper 2/25 (CP2/25) setting out proposals to increase the retail deposits threshold for the leverage ratio.

The leverage ratio is intended to give a simple percentage indicator of how much capital a firm has to fund its activities. Firms with over £50 billion in retail deposits, or £10 billion in non-UK assets, are currently required to meet a minimum leverage ratio requirement of 3.25% plus buffers. These thresholds took effect in 2016 and 2023 respectively and are designed to capture major UK banks, building societies and investment firms. In CP2/25 the PRA proposed to increase the retail deposits threshold by £20 billion to £70 billion, which it explained was to reflect nominal GDP growth since 2016.

Final policy

In PS22/25 the PRA sets out its final policy in relation to the retail deposits threshold for application of the leverage ratio requirement, which increases the threshold from £50 billion to £75 billion and introduces a three-year averaging mechanism for the calculation of firms’ retail deposits. The PRA has also decided to leave both the metric and threshold for application of the requirement for non-UK assets as they currently are.

Having considered the responses to CP2/25, the PRA decided to set the final retail deposits threshold at £75 billion instead of £70 billion to reflect the further increase in nominal UK GDP since CP2/25, and so fully restore the Financial Policy Committee’s (FPC) original risk appetite for the framework. The PRA has also decided that the threshold would have negative effects on the ability of building societies to grow, that the metric of firms’ retail deposits to be compared against the threshold should be calculated on a three-year moving average basis, rather than a point-in-time value.

Next steps

The final policy will take effect on 1 January 2026.

The PRA will continue to assess the effectiveness and appropriateness of both leverage ratio requirement thresholds as part of the FPC’s annual reviews of the overall leverage ratio framework.

The PRA granted modifications by consent to firms meeting certain criteria to disapply the Leverage Ratio – Capital Requirements and Buffers Part of the PRA Rulebook while the thresholds for its application were under review. The publication of PS22/25 marks the end of this review period and these modifications will cease to apply on 30 June 2026.