Leverage ratio – revised exposure definition
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Individual Reform: Leverage ratio – revised exposure definition 2026 - 2027

Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

No data available for the deliverable: Implementation of the Basel III revised leverage ratio, including an updated exposure definition to better capture both on- and off-balance sheet risks.

Summary

The leverage ratio is a straightforward safety check: it measures how much a bank has borrowed (its total exposure) compared to how much capital it holds. Unlike other capital adequacy ratios, the leverage ratio uses a simple exposure calculation rather than risk-weighted assets - making it harder for banks to game the calculation. The Basel III revisions updated the definition of "total exposure" to better capture off-balance-sheet risks such as derivative contracts and credit commitments. The revised leverage ratio and updated exposure definition are in effect across all South African banks. New reporting templates and public disclosure requirements have been implemented and SA banks' leverage ratios remain above global averages, supporting sector resilience. This reform has been COMPLETED and is in effect.

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Is it working?

Increased transparency and stronger leverage ratios across SA banks is confirmed through bank disclosures and reporting. Sector stress tests and results analysis confirm capital adequacy and resilience.

Actions

Sector-wide implementation complete and disclosure requirements are in place. Model validation has been completed by SARB and PA.

Are there plans?

The PA’s consultation on Basel III implementation outlines plans to: (i) finalise the leverage‑ratio exposure‑definition amendments and D‑SIB buffers alongside the credit‑risk and operational‑risk changes; (ii) monitor the impact of the leverage ratio on business models, particularly for low‑risk, high‑volume activities such as repo, SFTs and central‑clearing; and (iii) integrate leverage‑ratio monitoring into the broader supervisory review and evaluation process (SREP), including interaction with the output floor and risk‑based capital requirements. Future proportionality work, referenced in budget 2026, may further refine application to smaller banks. Aggregate data rollout, disclosure requirements and model validation by SARB and PA continue annually.

Is it on the agenda?

The 2026 Budget Review, (Financial sector update) notes that South Africa is finalising implementation of Basel III post‑crisis reforms, including leverage‑ratio changes and buffers for systemically important institutions, as part of a broader prudential‑reform agenda to strengthen financial stability and align with evolving international standards. The PA’s Regulatory Strategy 2025-2030 lists completion of Basel III leverage‑ratio reforms and proportionality work for smaller institutions as explicit priorities. Furthermore, there are detailed in PA and SARB Financial Stability Report updates, with annual Parliament reporting.

Goals

To update the definition of "total exposure" used in calculating the leverage ratio (a simple, transparent measure of how much a bank borrows relative to its capital) to better capture risks from both on-balance sheet assets and off-balance sheet obligations.

References

Departments / Govt Institutions

National Treasury South African Reserve Bank (SARB)

Analyst: Tinashe Kambadza
Status: Completed
Last Updated:
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