Article

Risk-weighted capital requirement or simple leverage ratio

Weighing up the possible consequences

Customer Magazin NEWS 03/2025

In a joint non-paper, BaFin and the Deutsche Bundesbank propose abolishing the risk-weighted core capital ratio for small institutions and replacing it with a risk-unweighted capital requirement in the form of an (increased) leverage ratio (LR) in conjunction with additional buffer solutions. This article examines examples of how the potential paradigm shift in supervision could affect the industry.

Anne Flatau

Prof. Dr. Konrad Wimmer

18. December 2025 5 minutes reading time

Introduction
Equity requirement "today and tomorrow"
Impact on the calculation of capital costs
Risk-adjusted or risk-neutral capital requirements
Outlook
Sources

Introduction

According to press reports, BaFin and the Deutsche Bundesbank propose in a joint non-paper, i.e. an unofficial discussion paper, to abolish the risk-weighted core capital ratio for institutions with total assets of up to ten billion euros and replace it with a risk-unweighted capital requirement in the form of an (increased) leverage ratio (LR) in conjunction with additional buffer solutions. For background information, see also the series of articles¹ by msg for banking.

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