UK Prudential Regulation Authority Publishes Policy Statement on Leverage Ratio Treatment of Omnibus Account Reserves

The Prudential Regulation Authority has published a policy statement on the leverage ratio treatment of omnibus account reserves and minor amendments to the leverage ratio framework. PRA rules require firms to exclude from the leverage ratio any claims on central banks matched by liabilities in the same currency and of identical or longer maturity. The PRA explains that a new model of reserves holding has emerged where the reserves of several firms are co-mingled in a single account held at the central bank—known as an "omnibus" account. Therefore, the PRA is:

• introducing new rules to apply the exclusion consistently across reserves held on omnibus accounts as well as traditionally-held reserves, with the exclusion of the former subject to specific additional conditions; and
• making minor amendments to SS45/15 and the leverage ratio disclosure and reporting instructions to provide clarification about the PRA's expectations and ensure consistency with PRA rules.

Only minor changes are being made to the proposals as consulted on. The PRA's final policy is set out in: (a) PRA Rulebook: CRR Firms: Leverage Ratio Instrument 2024, which amends the Glossary, Leverage Ratio (CRR), Disclosure (CRR) and Reporting (CRR) Parts of the PRA Rulebook; (b) updates to supervisory statement (SS) 45/15, "the UK leverage ratio framework"; (c) amendments to the "Instructions for leverage ratio disclosures"; and (d) amendments to the "Instructions for leverage ratio reporting".

The changes will take effect on August 5, 2024.

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