Consolidation and Clarity: A Closer Look at the Bank of England’s Revised MREL Approach
Consultation: Amendments to the Bank of England’s approach to setting a minimum requirement for own funds and eligible liabilities (MREL)
The Bank of England (the “Bank”), as resolution authority, has published a consultation paper (15 October 2024) (the “CP”) on amending its approach to setting a minimum requirement for own funds and eligible liabilities (“MREL”). The deadline for responses is 15 January 2025. The Bank anticipates finalising its response during the first half of 2025 with implementation to begin from 1 January 2026. HMT has published a statement welcoming the proposals. It states that it will engage with industry on changes to secondary legislation envisaged by the Bank.
The CP brings together proposals relating to the Bank’s statement of policy on its approach to setting a minimum requirement for own funds and eligible liabilities (the “MREL SoP”).
The proposals are grouped around three themes: (i) restating, with modifications, certain UK Capital Requirements Regulation (“UK CRR”) total loss-absorbing capacity (“TLAC”) provisions in the MREL SoP and other related changes; (ii) updates to the Bank’s indicative thresholds for setting a stabilisation power preferred resolution strategy; and (iii) revisions to reflect findings from the Resolvability Assessment Framework (“RAF”) and lessons from policy implementation.
The proposed changes to the Bank’s MREL SoP are set out in Annex 2 to the CP.
For a high-level overview see our publication below.
