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December 08, 2017

BNM published a policy document that sets out the leverage ratio framework for banking institutions, as part of the Basel III regulatory reforms. BNM also published the reporting template and the frequently asked questions on leverage ratio, along with the response to feedback received during consultation. According to the policy document, banking institutions will be required to comply with a minimum leverage ratio of 3% from January 01, 2018.

The leverage ratio is a non-risk-based capital measure that is intended to serve as a backstop to the risk-based Capital Adequacy Framework and to restrict the buildup of excessive leverage by banking institutions. BNM is committed to ensure that its policies remain relevant and continue to meet the intended objectives and outcome. Accordingly, BNM will review the policy document within five years from the date of issuance or its last review and, where necessary, amend or replace the policy document. The policy document supersedes the observation period reporting obligations for leverage ratio positions, under the Basel III Observation Period Reporting (Net Stable Funding Ratio and Leverage Ratio).

 

Related Link: Press Release

Effective Date: January 01, 2018

Keywords: Asia Pacific, Malaysia, Banking, Leverage Ratio, Basel III, BNM

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