Leverage ratio calculator
The Basel III leverage ratio divides Tier 1 capital by a total exposure measure that does not use risk weights. The minimum is 3%.
Leverage ratio formula
Leverage ratio = Tier 1 capital ÷ total exposure measure. The Basel Committee describes it as a simple ratio that is complementary to the risk-based framework and captures both on- and off-balance sheet leverage. Banks must meet a 3% minimum at all times.
What is in the exposure measure?
- On-balance sheet exposures (excluding derivatives and securities financing transactions)
- Derivative exposures
- Securities financing transaction exposures
- Off-balance sheet items
Collateral and credit risk mitigation generally cannot reduce the exposure measure, and banks may not net assets and liabilities, unless the framework specifies otherwise.
G-SIB leverage buffer
Global systemically important banks must also meet a leverage ratio buffer set at half of their higher loss-absorbency risk-based requirement. A 2% surcharge gives a 1% leverage buffer. National rules can differ in detail.
Worked example
Tier 1 of 140 against exposures of 2,500 gives 140 ÷ 2,500 = 5.6%, above the 3% minimum.
Frequently asked questions
What is the minimum leverage ratio under Basel III?
3% of the exposure measure, using Tier 1 capital, to be met at all times.
Why have a leverage ratio as well as risk-based ratios?
Risk weights can understate risk. A simple, non-risk-based ratio is a backstop that is complementary to the risk-based framework.
Does the leverage ratio use CET1 or Tier 1?
Tier 1 capital: CET1 plus Additional Tier 1.
Sources: Basel Committee on Banking Supervision, Basel Framework (RBC20 calculation of minimum risk-based capital requirements; LEV20 leverage ratio) and Basel III international regulatory framework for banks, bis.org; BIS FSI summary of the capital conservation and countercyclical buffers. Checked 10 October 2026.