The leverage ratio among G-SIBs is set at 50% of the bank’s risk-weighted higher-loss absorbency requirement. Therefore, a G-SIB with a $200m risk-weighted higher-loss absorbency requirement would be subject to a leverage ratio buffer of $100m.

Things to Remember

• Global Systemically Important Banks (G-SIBs) are financial institutions whose distress or failure could cause significant disruption to the global financial system.
• Risk-weighted higher-loss absorbency requirements are part of Basel III reforms aimed at strengthening the resilience of the banking sector by ensuring that banks hold adequate capital to cover potential losses.
• The leverage ratio is a measure of a bank's capital to its exposure and is designed to act as a backstop to the risk-based capital requirements.
• The leverage ratio buffer is a requirement that G-SIBs must hold additional capital above the minimum leverage ratio to further enhance their resilience.