This publication contains the 2023 external MRELs for all firms with a resolution entity incorporated in the UK for which an MREL above minimum capital requirements has been communicated.
Our approach to MREL disclosure is described below, including supporting assumptions and firm-specific information for bail-in and partial transfer preferred resolution strategy firms. Firm-specific MRELs are set out in Table A.
The Bank has updated the format of the disclosure to reflect the fact that as of 1 January 2023 most firms have reached their end-state MRELs and that, in future, firms which become newly subject to a preferred resolution strategy involving the use of stabilisation powers will be subject to the transition arrangements set out in the Bank’s revised Statement of Policy (SoP) on its approach to setting MREL. This year’s disclosure also reflects firm-specific judgements to adjust the MREL for firms with a partial transfer preferred resolution strategy, under paragraph 4.8 of the MREL SoP.
Our approach to MREL disclosure
This information is structured as follows:
- Explanation of approach to disclosure;
- Firm-specific information for a bail-in preferred resolution strategy; and
- Firm-specific information for a partial transfer preferred resolution strategy.
1. The minimum requirements for own funds and eligible liabilities (MREL) set out in this disclosure apply from 1 January 2023 unless otherwise specified in paragraphs 7 and 10. MRELs have been set on the basis of the MREL SoP.footnote 
2. This publication contains the 2023 external MRELs for all firms with a resolution entity incorporated in the UK for which an MREL above minimum capital requirements has been communicated. Individual external MRELs are based on balance sheet data as at 31 December 2022 and minimum capital requirements as at 17 March 2023. Any subsequent changes to balance sheet data and minimum capital requirements are not reflected in this disclosure and may affect a firm’s MREL as set out in Table A.
3. For firms whose binding minimum capital requirement is based on risk-weighted assets (RWAs), the table contains each firm's Pillar 1 and Pillar 2A requirements expressed as a percentage of the firm's RWAs. For firms with a leverage-based binding minimum capital requirement, Table A contains each firm's requirement expressed as a percentage of the total value of the firm’s leverage exposures (LEs). This is based on the current definition of the ‘total exposure measure’ as set out in the Leverage Ratio (CRR) Part of the Prudential Regulation Authority (PRA) Rulebook.footnote  MRELs expressed as a percentage of LEs are given to the nearest 0.05% to align the number of decimal places with the leverage-based binding minimum capital requirement. In the context of these paragraphs, a ‘binding’ capital requirement means the requirement which requires the greatest quantum of total capital resources at a given point in time. More than one capital requirement may be legally binding at one time. In addition to the requirements set out in the SoP, UK resolution entities of global systemically important banks (G-SIBs) and material subsidiaries of non-UK G-SIBs are subject to separate requirements set by the retained EU law version of Regulation 575/2013/EU (CRR), relating to total loss-absorbing capacity (TLAC).
4. The buffers included in Table A comprise:
a. A capital conservation buffer of 2.5%;
b. Financial Stability Board (FSB) G-SIB buffers based on the FSB’s 2022 list of G-SIBs;footnote  and
The UK countercyclical capital buffer (CCyB) rate is assumed to be 1%, as applicable at 13 December 2022.footnote  In all other jurisdictions the CCyB rate is assumed to be 0% (in practice positive rates do apply currently in some jurisdictions).
The buffers in Table A do not include any PRA buffers, the size of which is firm-specific and confidential. The calculation of firms’ combined buffers above MREL is in line with PRA Supervisory Statement 16/16,footnote  where relevant.
5. The Bank sets the MRELs that will apply to individual firms on an annual basis for the year ahead, based on the latest available regulatory data on each firm. The MREL set for a specific firm in any given year will ultimately depend on a number of factors including, but not limited to:
a. changes to the firm and its balance sheet, including changes to its regulatory capital requirements and RWAs;
b. the Bank’s preferred resolution strategy for the firm (which the Bank must review annually);
c. an assessment of the concerns regarding the resolvability of the firm, including the progress of the firm in achieving resolvability;
d. where applicable, discussions within international crisis-management groups; and
e. future changes in Bank, PRA or international policy, or in the applicable legal regime, which change the way MREL or capital requirements are calculated.
6. The firms that must meet MREL on the basis of a bail-in resolution strategy are: Barclays, Coventry Building Society, HSBC (Group, and European Resolution Group), Leeds Building Society, Lloyds Banking Group, Metro Bank, Nationwide Building Society, NatWest Group, OSB Group, Santander UK, Skipton Building Society, Standard Chartered, The Co-operative Bank, Virgin Money UK and Yorkshire Building Society.
7. Table A shows the binding external MRELs that are currently in effect for these firms, except for Leeds Building Society and OSB Group. End-state external MRELs apply from 21 July 2023 for Leeds Building Society. The requirement shown in Table A for OSB Group is equal to its minimum capital requirements. OSB Group is expected to meet its interim MREL from 13 July 2024 and its end-state MREL from 13 July 2026.
8. UK resolution entities that are G-SIBs, other than HSBC Group (for which see paragraph 9 below), are required to maintain end-state external MRELs equivalent to the higher of (on a consolidated basis):
i. 2x(Pillar 1 plus Pillar 2A); or
ii. the higher of two times the applicable leverage ratio requirement or 6.75% of LEs (in line with the FSB’s TLAC standard),
G-SIB entities are also subject in parallel to the requirements for TLAC set out in CRR which will be binding if higher in any case; that is, the higher of 18% of RWAs or 6.75% of LEs.
9. The preferred resolution strategy for HSBC Group is a multiple point of entry bail-in strategy. The end-state external MRELs given above that apply to the European Resolution Group (HSBC Holdings plc, HSBC Bank UK plc, HSBC Bank plc and their subsidiaries) will contribute towards meeting HSBC’s Group requirement, in line with the FSB’s TLAC standard for G-SIBs. The HSBC Group requirement reflects the higher of: (i) 18% of RWAs on a consolidated basis; (ii) 6.75% of LEs on a consolidated basis; and (iii) the sum of requirements relating to other group entities or sub-groups. The end-state ‘sum of parts’ figures for (iii) are estimates based on current information about requirements that would apply to other group entities or sub-groups in other jurisdictions. HSBC European Resolution Group is not itself subject to a minimum capital requirement and the binding minimum capital requirement shown in Table A is calculated for the purpose of determining an MREL requirement for the HSBC Euro Resolution Group. It is shown for illustrative purposes only.
10. The firms that must meet MREL on the basis of a partial transfer resolution strategy are Monzo Bank and Starling Bank. The table shows the interim external MRELs that apply from 26 April 2023. These firms are also expected to meet end-state MRELs from 26 April 2025.
11. As noted in paragraph 4.8 of the MREL SoP, for firms subject to a partial transfer preferred resolution strategy, the Bank may choose to adjust a firm’s MREL downwards from the full amount that would be required for a bail-in resolution strategy. The quantum of MREL may be adjusted to reflect the fact that, in a partial transfer resolution, less than the entire balance sheet of the institution may need to be recapitalised at the point of resolution. This is a firm-specific judgement balancing a number of factors.
12. The Bank has made firm-specific adjustments to the interim external MREL and indicative end-state external MREL for Monzo Bank and Starling Bank. The Bank has determined indicative end-state external MRELs (applicable from April 2025) for each firm of 1.3 times their binding minimum capital requirement. Interim external MRELs have been adjusted to take the revised indicative end-state MREL into account and are reflected in Table A. These are the lower of 18% RWAs or 1.15 times the binding minimum capital requirement, but not less than the binding minimum capital requirement.
13. The Bank’s firm-specific judgements are based on these firms’ current preferred resolution strategy and balance sheets. In reaching its judgement the Bank has taken into account its policy set out in paragraph 4.8 of the MREL SoP; the need to ensure firms can be resolved in a way that meets the special resolution objectives set out in the Banking Act;footnote  and applicable legislation. This includes, but is not limited to, consideration of the firm’s business model, funding model and risk profile (such as the relative size of cash or similar assets and the proportion of liabilities necessary for the continuity of a critical function) and the ability to conduct an orderly execution of the resolution strategy including effecting an orderly transfer to a third-party private sector purchaser.
14. The Bank’s judgement as to the firm-specific adjustment required may change over time, for example in response to a change to a firm’s preferred resolution strategy or the size and composition of its balance sheet.
External MRELs – 2023
Coventry Building Society
HSBC: European Resolution Group
Leeds Building Society
Lloyds Banking Group
Nationwide Building Society
Skipton Building Society
The Co-operative Bank
Virgin Money UK
Yorkshire Building Society
- (a) Individual external MRELs are based on balance sheet data as at 31 December 2022 and minimum capital requirements as at 17 March 2023 (see paragraph 2).
- (b) Risk-weighted assts (RWAs); leverage exposures (LEs).
- (c) For dates from which interim and/or end-state MRELs apply to each firm, please see paragraphs 1, 7 and 10.
Bank of England (2022), The countercyclical buffer (CCyB).
Banking Act 2009, section 4.