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).