Setting the minimum capital requirement
5.1 In its 2015 PS, the FPC calibrated the minimum leverage ratio capital requirement to be 3%, given the domestic and international experience of bank losses during past episodes of banking stress. Other things being equal, a 3% minimum leverage ratio requirement would have been sufficient to absorb the average peak losses experienced by major UK banks between 2007 and 2013.
5.2 The FPC continues to consider that this is an appropriate calibration for the baseline minimum, were central bank reserves included in the exposure measure. This is in line with the finalised international standard.
5.3 As a result of its 2016 review, the FPC increased the minimum leverage ratio requirement by 25 basis points, from 3% to 3.25% of total exposures, excluding central bank reserves. This was in order to ensure that excluding central bank reserves from the exposure measure at the time did not reduce the amount of capital needed to meet leverage ratio capital
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