Disallowable expenditure and Leverage Ratio: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
m (Category added 8/10/13)
 
imported>Doug Williamson
(Layout.)
 
Line 1: Line 1:
''Tax''
''Bank regulation''.
Amounts paid out by a taxpayer which are not eligible for tax relief.


Such amounts charged to accounting profits would be added back to the accounting profits, in the calculation of taxable profits in the taxpayer's tax computation.
(LR).
 
A requirement under Basel III regulations for regulated institutions to hold a minimum ratio of capital to absolute balance sheet outstandings (plus certain other items).
 
It is calculated as:
 
LR = Tier 1 capital / Leverage Ratio Exposure (LRE)
 
 
The leverage ratio is the long term capital ratio for banks by which their Tier 1 capital should in due course be at least 5% of their assets.
 
This will generally be that their shareholders funds will be >=5% of their loans although the definitions may be subject to domestic practices.
 
 
Domestic regulators can set higher ratios and the USA has set higher ratios for eight Systemically Important Financial Institutions (SIFIs) than for non-SIFIs.
 
This requirement is intended to be implemented progressively by 1 January 2019.
 
 
The initial minimum Basel III requirement was set at 3%, for periods to the end of 2016.
 
 
=====Leverage Ratio Exposure=====
The [[Leverage Ratio Exposure]] (LRE) - for the purposes of calculating the Leverage Ratio - includes certain other risk exposures, in addition to on-balance sheet assets.


For this reason they are sometimes known as 'addbacks'.


== See also ==
== See also ==
* [[Tax computation]]
* [[Basel III]]
* [[Tax relief]]
* [[Countercyclical leverage ratio buffer]]
 
* [[G-SII ALRB]]
[[Category:Taxation]]
* [[Liquidity Coverage Ratio]]
* [[Net stable funding ratio]]
* [[Leverage]]
* [[Leverage Ratio Exposure]]
*[[LRT]]
* [[Off balance sheet risk]]
*[[Systemically Important Financial Institution]]

Revision as of 13:16, 11 November 2016

Bank regulation.

(LR).

A requirement under Basel III regulations for regulated institutions to hold a minimum ratio of capital to absolute balance sheet outstandings (plus certain other items).

It is calculated as:

LR = Tier 1 capital / Leverage Ratio Exposure (LRE)


The leverage ratio is the long term capital ratio for banks by which their Tier 1 capital should in due course be at least 5% of their assets.

This will generally be that their shareholders funds will be >=5% of their loans although the definitions may be subject to domestic practices.


Domestic regulators can set higher ratios and the USA has set higher ratios for eight Systemically Important Financial Institutions (SIFIs) than for non-SIFIs.

This requirement is intended to be implemented progressively by 1 January 2019.


The initial minimum Basel III requirement was set at 3%, for periods to the end of 2016.


Leverage Ratio Exposure

The Leverage Ratio Exposure (LRE) - for the purposes of calculating the Leverage Ratio - includes certain other risk exposures, in addition to on-balance sheet assets.


See also