Attachment D – Leverage ratio

1. An ADI must calculate its leverage ratio as follows:

<table cellspacing="0" cellpadding="0" style="margin-left:28.1pt; margin-bottom:0pt; border-collapse:collapse"><tbody><tr><td rowspan="2" style="width:109.7pt; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="BodyText1" style="margin-top:18pt; margin-left:0pt; margin-bottom:6pt; text-indent:0pt; text-align:center"><span style="font-style:italic">Leverage ratio =</span></p></td><td style="width:95.75pt; border-bottom:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="BodyText1" style="margin-top:6pt; margin-left:0pt; margin-bottom:3pt; text-indent:0pt; text-align:center"><span style="font-style:italic">Tier 1 Capital</span></p></td></tr><tr><td style="width:95.75pt; border-top:0.75pt solid #000000; padding-right:5.4pt; padding-left:5.4pt; vertical-align:top"><p class="BodyText1" style="margin-top:3pt; margin-left:0pt; text-indent:0pt; text-align:center"><span style="font-style:italic">Exposure Measure</span></p></td></tr></tbody></table>

where:

1. Tier 1 Capital is determined in accordance with APS 111; and

2. the exposure measure is determined in accordance with this Attachment and is calculated as the sum of:[13]

   1. on-balance sheet exposures;
   2. non-market related off-balance sheet exposures;
   3. derivative exposures; and
   4. securities financing transaction (SFT) exposures.

3. Unless otherwise specified in this Attachment, an ADI must follow Australian Accounting Standards in calculating its exposure measure, subject to the following:

   1. physical or financial collateral, guarantees or other credit risk mitigation techniques must not be taken into account by an ADI to reduce the exposure measure;
   2. netting of assets and liabilities is not permitted; and
   3. securitisation exposures which meet the operational requirements for regulatory capital relief, as set out in APS 120, may be excluded from the exposure measure. All other securitisation exposures, including funding-only and synthetic securitisations, must be included in the exposure measure.

4. APRA may temporarily exclude central bank reserves from the leverage ratio exposure measure in exceptional macroeconomic circumstances. If APRA excludes central bank reserves, it may increase the minimum leverage ratio requirement commensurately to offset the impact of the exclusion. In the event that APRA excludes central bank reserves from the calculation of the exposure measure, an ADI must publicly disclose the impact of the exclusion, as well as its leverage ratio calculated without the benefit of the exclusion.