The Bank of England’s approach to setting a minimum requirement for own funds and eligible liabilities (MREL)

Statement of Policy
Published on 03 December 2021

First published on 8 November 2016

This Statement of Policy sets out the Bank of England’s policy for exercising its power to direct relevant persons to maintain a minimum requirement for own funds and eligible liabilities (MREL) under section 3A(4) and 4(B) of the Banking Act 2009.

Updates for firms

18 April 2023: MREL for firms with a partial transfer preferred resolution strategy

Paragraph 4.8 of the statement of policy states that ‘where an institution meets the necessary conditions for a partial transfer resolution strategy to be appropriate, its external MREL will be set taking this into account’. 

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. This is a firm-specific judgement balancing a number of factors. 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. The Bank’s judgment 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.

The Bank has reflected adjustments made to the binding interim MREL for firms with a partial transfer preferred resolution strategy, under paragraph 4.8, in its latest publication of UK-headquartered firms’ MRELs. The Bank has also 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 statement of policy (as updated in 2021). 

  • Institutions and groups should notify the Bank if they forecast, at any point in time, that their total assets will exceed £15 billion and/or 40,000 – 80,000 transactional accounts in the following three years. This is set out in paragraphs 9.7 and 9.10 of the statement of policy. In case of questions, please speak to your usual supervisory or resolution authority contact, or email resolution.enquiries@bankofengland.co.uk.
  • Applications for a flexible add-on should be sent by institutions to resolution.enquiries@bankofengland.co.uk, copying in their usual Resolution Directorate contact. The application should set out what extension the institution is seeking and provide supporting evidence to justify the application. Institutions should prepare their request taking into account this Statement of Policy and, in particular, paragraph 9.9.