A bank identified as a G-SIB under SCO40 must meet a leverage ratio buffer in addition to the 3% minimum, using Tier 1 capital (LEV40.1). The buffer equals 50% of the G-SIB's risk-based higher loss-absorbency requirement, so a 2% requirement produces a 1% buffer (LEV40.2). Like the risk-based buffers, it is divided into five ranges of minimum capital conservation ratios, and a G-SIB falling short faces restrictions on capital distributions (LEV40.3). A G-SIB meeting both its CET1 risk-based requirements (4.5% minimum, 2.5% conservation buffer, higher loss absorbency and any countercyclical buffer) and its Tier 1 leverage requirement faces no conservation constraint; if one is missed the associated standard applies, and if both are missed the higher standard applies (LEV40.4). For a G-SIB with a 1% risk-based surcharge, leverage ratios from 3% to 3.125% require retaining 100% of earnings, stepping down to 0% above 3.50% (LEV40.5). The buffer applied from 1 January 2023 based on the FSB's 2021 G-SIB list using end-2020 data, is updated annually with the list, and jurisdictions may set it higher (LEV90.1-90.2).
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