What is the Supplementary Leverage Ratio and Why is it Important?
Posted on 03/04/2021
Supplementary Leverage Ratio is also known as SLR.
SLR (%) = Tier 1 Capital / Total Leverage Exposure
Tier 1 Capital = As defined by U.S. Basel III = Common Equity Tier 1 and Additional Tier 1 capital, subject to adjustments, dedications, and transitional arrangements.
Total Leverage Exposure = Both on-balance sheet and off-balance sheet exposures such as over-the-counter derivatives, cleared derivatives, repo-style transactions, and other off-balance sheet exposures.
Background
U.S. banking organizations have long been subject to a leverage capital requirement based on the ratio of a banking organization’s Tier 1 capital to its average total consolidated on-balance sheet assets. This is the U.S. leverage ratio.