Executing bail-in: an operational guide from the Bank of England

Today, the Bank of England published Executing bail-in: an operational guide from the Bank of England.
Published on 22 July 2021

Bail-in is one of the stabilisation tools available to the Bank as resolution authority under the Banking Act 2009. Bail-in ensures investors, rather than public funds, bear losses where a firm fails. 

The Bank has previously published an overview of the process it has designed for conducting a bail-in – the ‘exchange mechanic’ – set out in The Bank of England’s Approach to Resolution. In The Bank of England's Approach to Assessing Resolvability, the Bank published further information, including an indicative stylised resolution timeline, which provides an illustration of how the Bank anticipates a bail-in resolution may be conducted.

This operational guide provides practical information on the ways in which the Bank of England might execute a bail-in resolution, and in particular the operational processes and arrangements that may be involved.

The Bank is also publishing three draft Template Resolution Instruments, a Bail-in Resolution Instrument, a Supplemental Resolution Instrument, and an Onward Transfer Resolution Instrument. The Template Resolution Instruments would be a useful starting point for the preparation of the instruments and other documents required for a bail-in. 

In practice, a bail-in is likely to be a highly complex transaction involving multiple parties. This document is intended to increase awareness and understanding of the actions that may take place in a bail-in resolution in the United Kingdom. 

In light of the fact that bail-in is a crisis management tool, the Bank reserves its full discretion to depart from the approach in the operational guide and Template Resolution Instruments should it be judged appropriate in the circumstances of a particular case.