Risk of Excessive Leverage | Prudential Regulation Authority Handbook & Rulebook
Prudential Regulation Authority Rulebook

Prudential Regulation Authority Rulebook

Part

Internal Capital Adequacy Assessment

Chapter

Risk of Excessive Leverage

Printed on: 19/06/2025

Rulebook at: 10/07/2022


11

Risk of Excessive Leverage

11.1

A firm must have in place policies and procedures for the identification, management and monitoring of the risk of excessive leverage.
  • 01/01/2014

11.2

Those policies and procedures must include, as an indicator for the risk of excessive leverage, the leverage ratio determined in accordance with Article 429(2) of Chapter 3 of the Leverage Ratio (CRR) Part and mismatches between assets and obligations.

[Note: Art 87(1) of the CRD]

  • 01/01/2022

11.3

A firm must address the risk of excessive leverage in a precautionary manner by taking due account of potential increases in that risk caused by reductions of the firm's own funds through expected or realised losses, depending on the applicable accounting rules. To that end, a firm must be able to withstand a range of different stress events with respect to the risk of excessive leverage.

[Note: Art 87(2) of the CRD]

  • 01/01/2014