DOMESTIC SYSTEMICALLY IMPORTANT BANKS: MINIMUM LEVERAGE RATIO BUFFER REQUIREMENTS PROPOSED

DOMESTIC SYSTEMICALLY IMPORTANT BANKS: MINIMUM LEVERAGE RATIO BUFFER REQUIREMENTS PROPOSED

• 26 July 2023
• Financial Sector
• SA Legal Academy

The Prudential Authority has called for input by 31 August 2023 on a draft directive that, once in force, will require local systemically important banks to meet a leverage ratio buffer requirement intended to ‘further reinforce the resilience of the (domestic) banking system’.

The proposals are underpinned by Basel Committee on Banking Supervision leverage ratio buffer minimum requirements for global systemically important banks. Introduced in 2015, these have since been revised and consolidated.

The minimum leverage ratio buffer envisaged would be ‘equivalent to 50% of the … higher loss-absorbency requirement’ applicable to a bank or its controlling company. This would be ‘in addition to the minimum leverage ratio requirement specified in Regulation 38(15)(b)(iv) of proposed amendments to the … (Banks Act) regulations’.

It is not clear when these ‘proposed amendments’ were released for public comment – or if any such amendments are even being considered. Dealing with capital adequacy and leverage, Regulation 38 was last amended in September 2022.

• draft directive
• September 2022 amendments

Published by SA Legal Academy Policy Watch

0 COMMENTS

LEAVE A COMMENT