The Prudential Regulation Authority (PRA) published a consultation proposing to increase the retail deposits threshold that determines which UK banks, building societies and investment firms are subject to the PRA’s leverage ratio requirement, alongside minor consequential amendments to Supervisory Statement 45/15 on the UK leverage ratio framework. The PRA proposes lifting the threshold to GBP 70 billion to address “prudential drag” from nominal UK GDP growth since the threshold was introduced in 2016 and to preserve proportionality in the framework. Under the UK framework, firms crossing either the retail deposits threshold or the GBP 10 billion non-UK assets threshold are subject to the Leverage Ratio – Capital Requirements and Buffers Part of the PRA Rulebook, including a minimum 3.25% Tier 1 leverage requirement and leverage buffers (a countercyclical leverage buffer and, for systemic firms, an additional leverage ratio buffer). Firms below these thresholds remain subject to a PRA supervisory expectation that their leverage ratio should not ordinarily fall below 3.25%, without leverage buffers and without a leverage-based Minimum Requirement for Own Funds and Eligible Liabilities (MREL). The PRA does not propose changing the non-UK assets threshold and estimates that fewer than five UK firms would fall out of scope of the leverage ratio requirement relative to a no-change counterfactual, with potential benefits including reduced capital and MREL impacts for a subset of firms and operational savings estimated at around GBP 130,000 per annum. The consultation closes on 5 June 2025, with implementation proposed for 1 January 2026. If the changes are implemented, the PRA intends to revoke and withdraw the modifications by consent offered in September 2024 that temporarily allowed certain firms to disapply the leverage ratio requirement while thresholds were under review.
Prudential Regulation Authority 2025-03-05
Prudential Regulation Authority consults on raising leverage ratio retail deposit threshold from GBP 50 billion to GBP 70 billion
The Prudential Regulation Authority (PRA) is consulting on raising the retail deposits threshold to GBP 70 billion for UK banks, building societies, and investment firms subject to the leverage ratio requirement, citing nominal UK GDP growth since 2016. The proposal aims to maintain proportionality and reduce "prudential drag," with fewer than five firms expected to fall out of scope, potentially saving GBP 130,000 annually. The non-UK assets threshold remains unchanged, with implementation proposed for January 2026.