The Bank of England’s Financial Policy Committee said on 7 July 2026 that it is proposing changes to the UK bank leverage framework as part of a broader bank capital review. The proposals include removing the countercyclical leverage buffer, lowering the Tier 1 leverage minimum to 3% from 3.25%, setting systemic leverage buffers at 50% of their risk-weighted equivalents, and adding a general 25 basis point leverage ratio buffer that could be released to zero in stress.
The FPC said the current UK framework consists of a 3.25% minimum based on a leverage exposure measure that excludes central bank reserves, plus additional systemic leverage buffers for global systemically important banks and certain other systemically important institutions, and a countercyclical leverage buffer. It said the two buffers are currently set at 35% of their risk-weighted counterparts.
The committee said the leverage ratio has become more binding over time and was the binding Tier 1 constraint, or close to it, for three of seven major UK banks. It said the proposed package is intended to make the framework simpler, more proportionate and more usable in stress, while keeping large UK banks within the international range.
The FPC said that, when combined with planned adjustments to Bank Capital Stress Test leverage hurdle rates, the changes would reduce the leverage ratio that large UK banks need to maintain by about 20 basis points in aggregate, with differences by bank. In a separate statement, the Prudential Regulation Authority said it would work to improve the usability and releasability of capital buffers, including clarifying that it could release O-SII buffers in systemic stress using existing powers. Governor Andrew Bailey also said it would not be appropriate to exclude gilts from leverage ratio calculations.