Short answer: in the UK, hitting 100% on the Liquidity Coverage Ratio does not mean a firm is compliant. Above the ratios sits the Overall Liquidity Adequacy Rule (OLAR), which requires a firm to hold, at all times, liquidity resources adequate in both amount and quality, so that there is no significant risk it cannot meet its liabilities as they fall due. The OLAR is a judgment standard, and it makes the LCR a floor rather than a safe harbor: a firm can pass the LCR and still breach the OLAR.
The OLAR lives in the Internal Liquidity Adequacy Assessment Part of the PRA Rulebook. Its wording is deliberately broad: a firm must maintain liquidity resources that are adequate, in amount and quality, at all times, such that there is no significant risk that its liabilities cannot be met as they fall due.
Two features of that phrasing matter. "At all times" makes it a continuous obligation, not a monthly reporting test. And "adequate in amount and quality" is a standard of judgment, not a single formula: what counts as adequate depends on the firm's actual risk profile.
The rule also says what does not count toward those resources. Liquidity support from other group members and central bank emergency liquidity assistance are excluded, so a firm has to be adequate on its own resources. Whether regular central bank facilities should count is the live question in the PRA's consultation CP5/26.
The LCR is one standardized stress scenario applied uniformly to every bank. It is powerful precisely because it is standard, and that is also its limit: it cannot capture the risks specific to a particular firm. Intraday liquidity needs, currency mismatches, franchise-specific outflows and concentration in the funding base are not fully reflected in a single 30-day cumulative number.
The OLAR exists to close that gap. It asks the broader question the ratio cannot: given everything about this firm, is its liquidity genuinely adequate? A bank whose real risk profile demands more than the standardized ratio implies is expected to hold more, whatever its LCR says.
This is the practical heart of the OLAR. Meeting 100% LCR is necessary but not sufficient. A firm can report a healthy LCR and still be in breach of the OLAR if its actual risk profile means its liquidity is not adequate at all times. The ratios are inputs into the adequacy judgment, not the judgment itself.
For firms used to treating the LCR as the finish line, this is a real shift in mindset. In the UK, the LCR is the floor a firm must clear before the firm-specific adequacy question even begins.
Because the OLAR is a judgment standard, a firm has to be able to demonstrate that its liquidity is adequate, and that demonstration is the Internal Liquidity Adequacy Assessment Process (ILAAP). The ILAAP is, in effect, the firm's evidenced argument that it complies with the OLAR: its risk identification, internal stress testing, survival horizon analysis and risk appetite, all showing that resources are adequate for its actual profile. The behavioral assumptions behind the ILAAP carry much of that argument.
This is why the UK ILAAP carries more formal weight than its EU counterpart. It is not just a supervisory input; it is the mechanism through which a firm proves it meets a binding, overarching rule. A weak ILAAP is therefore a direct OLAR problem.
Yes. CP5/26, the PRA's March 2026 consultation on modernizing the liquidity framework, proposes to revise the Internal Liquidity Adequacy Assessment Part. It would clarify that central bank facilities that are regularly available on published terms can count toward liquidity adequacy, provided the firm is operationally ready to use them, while emergency assistance stays excluded. It would also bring buffer composition into the amount-and-quality test. The consultation closed in June 2026, and final rules have not yet been published.
For the full breakdown of the LCR, NSFR, ILAAP and liquidity reporting, and how Basel, the EU, the UK and the US differ, see Mirai RiskTech's guide liquidity regulation across Basel, the EU, the UK and the US: LCR, NSFR and reporting compared.