Laura WilesThe BoE is consulting on restating, where appropriate and with modifications, of UK Capital Requirements Regulation total loss-absorbing capacity (TLAC) provisions to the minimum requirement for own funds and eligible liabilities (MREL).
The proposal is intended to simplify the MREL framework by consolidating several distinct requirements, ensure the framework remains in step with wider developments, and respond to requests for further guidance on the MREL from firms and practitioners. BoE expects the proposals to increase certainty and reduce compliance costs for firms, although it notes that some individual proposals may result in additional, but manageable, costs for some firms.
The MREL Statement of Policy was last amended in 2021 following BoE’s review of its MREL framework, which considered the the indicative thresholds for setting a stabilisation power preferred resolution strategy, MREL calibration, instrument eligibility and the application of MRELs within banking groups. BoE introduced several measures to support growing firms, and initiated a project with the FSCS to develop alternative processes to reduce disruption to transactional accounts in the event of an insolvency procedure.
The consultation closes on 15 January 2025.