17.09.2020

The European Central Bank (ECB) announced that euro area banks under its direct supervision may exclude certain central bank exposures from the leverage ratio because of the exceptional circumstances due to the COVID-19 pandemic. The Capital Requirement Regulation (CRR) “quick fix” allows banking supervisors, after consulting the relevant central bank, to allow banks to exclude central bank exposures - such as coins, banknotes as well as deposits held at the central bank - from their leverage ratio exposure measure. The current decision is valid until 27 June 2021. ECB Banking Supervision would have to publish a new decision should it wish to further extend the exclusion beyond June 2021, when the 3% leverage ratio requirement will become binding. Based on end-March 2020 data, the measure would raise the aggregate leverage ratio of 5.36% by about 0.3 percentage points. It also provides additional relief to globally systemically important banks (G-SIBs) and subsidiaries of foreign G-SIBs under the binding total loss-absorbing capacity (TLAC) requirement.

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