Actual and indicative minimum requirements for own funds and eligible liabilities (MREL)

In June 2018, the Bank published a Statement of Policy on its approach to setting a minimum requirement for own funds and eligible liabilities (MREL)  for UK banks, building societies and large investment firms.

Overview

For resolution plans to be feasible and credible, UK firms are required to maintain sufficient resources that can absorb losses and provide for recapitalisation in resolution. To achieve this, the Bank, as the UK’s resolution authority, requires all banks, building societies and certain investment firms to maintain a minimum requirement for own funds and eligible liabilities (MREL).  

This publication contains actual requirements for 2019 and indicative requirements for 2020-21 and 2022 for UK firms.

PDFActual and indicative minimum requirements for own funds and eligible liabilities (MREL)

What is MREL? 

The firms in this publication have resolution strategies which involve bail-in or partial transfer, and so must maintain sufficient equity and debt resources that can absorb losses and provide for recapitalisation in resolution.

MREL is the minimum amount of equity and subordinated debt a firm must maintain to support an effective resolution. This is separate to the capital requirements set by the PRA.

For debt or equity to count to MREL, it must meet specific conditions. These conditions ensure we could depend on that equity and debt to support a resolution.

MREL ensures that investors and shareholders – and not the taxpayer – absorb losses when a firm fails. We set MREL to reflect how we would expect to resolve a firm if they failed. The biggest and/or most complex firms have the highest MRELs – reflecting that they would be more disruptive if they failed in a disorderly way.

Actual and indicative MRELs

We publish, in this document, the MRELs that we require firms that are headquartered in the UK to currently maintain. This publication also provides an indication of the 2020-21 and 2022 MRELs that firms will have to meet.  We have calculated the figures by applying our policy on setting MREL to firms’ balance sheet data, as at 31 December 2018.

We have published MRELs on an individual basis for global and domestic systemically important banks and building societies headquartered in the UK. We have published average MRELs for other UK-headquartered firms which are required to maintain MREL above their capital requirements. 

From next year onwards, we intend to publish individual MRELs, rather than an average, for all firms with an indicative MREL above capital requirements.

We are committed to, before the end of 2020, reviewing the calibration of MREL, and the final compliance date, prior to setting end-state MRELs. In doing so, we will have regard to any intervening changes in the UK regulatory framework, due to the revision of the Bank Recovery and Resolution Directive and the Capital Requirements Regulation, as well as firms’ experience in issuing liabilities to meet their interim MRELs.

This page was last updated 14 August 2019
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