1.This Standard articulates specific requirements for the calculation of the leverage ratio capital requirement for banks in the UAE. It is based closely on requirements of the framework for capital adequacy developed by the Basel Committee on Banking Supervision, specifically as articulated in Basel III: Finalising post-crisis reforms, December 2017.

2.The Central Bank leverage ratio framework introduces a simple, transparent, non-risk based measure to act as a credible supplement to the risk-based capital requirements. The leverage ratio is intended to:

• •Restrict the build-up of leverage in the banking sector to avoid destabilizing deleveraging processes that can damage the broader financial system and the economy; and
• •Reinforce the risk-based requirements with a simple, non-risk based “backstop” measure.

3.The Central Bank is of the view that:

1. •A simple leverage ratio framework is critical and complementary to the risk-based capital framework; and
2. •A credible leverage ratio is one that ensures broad and adequate capture of both the on- and off-balance-sheet sources of banks’ leverage.

4.This Standards supports the Central Bank’s Regulations Re Capital Adequacy and shall be applied as set forth therein.