July 2021 Resolution publications

The Bank of England has today published a statement from Dave Ramsden, which accompanies two Resolution publications: a Consultation Paper reviewing the Bank’s approach to setting a minimum requirement for own funds and eligible liabilities (MREL); and an Operational Guide on executing bail-in.
Published on 22 July 2021

News release

The Bank of England has today published a statement from Dave Ramsden, which accompanies two Resolution publications: a Consultation Paper reviewing the Bank’s approach to setting a minimum requirement for own funds and eligible liabilities (MREL); and an Operational Guide on executing bail-in.

These publications build on the progress made to develop the UK resolution regime over the last decade, and represent the latest stage of development of what is an increasingly mature regime. 

The Consultation Paper is the second stage of the MREL Review and sets out the Bank’s proposed changes to its MREL framework. It follows on from a first stage Discussion Paper issued by the Bank in December 2020. The feedback and ideas gathered from stakeholders have informed the Bank’s thinking on the proposals presented in the Consultation Paper. 

The second publication is an Operational Guide on how the Bank might execute a bail-in, alongside draft template legal instruments it might make. It is intended to increase awareness and understanding of the actions that may take place as part of a bail-in resolution in the United Kingdom, and to enhance the transparency and credibility of the tool.

Notes for editors

  1. The Bank of England, as the UK resolution authority, is responsible for taking action to manage the failure of certain financial institutions – including UK-headquartered banking groups and UK-incorporated banks and building societies (together, banks) –  a process known as ‘resolution’. Resolution allows the shareholders and unsecured creditors of failed banks to be fully exposed to losses, while ensuring the critical functions of the bank can continue. Resolution reduces the risks to depositors, the financial system, and public funds that could arise due to the failure of a bank.
  2. The minimum requirement for own funds and eligible liabilities (MREL) is a minimum requirement for banks to maintain equity and eligible debt so that they can be ‘bailed in’ should a bank fail. The purpose of MREL is to help ensure that when banks fail the resolution authority can use these financial resources to absorb losses and recapitalise the continuing business. As a result, MREL is a critical element of an effective resolution regime.
  3. The Bank reaffirmed in June 2018 that it would review the calibration of MREL and the final compliance date, prior to setting end-state MRELs, having particular regard to any intervening changes in the UK regulatory framework as well as banks’ experience in issuing liabilities to meet their interim MRELs.