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Investing.com -- The Bank of England on Tuesday made amendments to its approach for setting minimum requirements for own funds and eligible liabilities (MREL) following a consultation that ran from October 2024 to January 2025.
The central bank received 26 written responses to its proposals and has revised some aspects of its policy based on the feedback. The changes aim to ensure a "robust and proportionate foundation for managing bank and building society failures."
Key revisions include increasing the total assets indicative thresholds to £25 billion–£40 billion from January 2026, reflecting nominal economic growth since MREL was introduced in 2016.
The Bank said it will update these thresholds every three years starting in 2028.
The Bank also confirmed it will set MREL equal to minimum capital requirements (MCR) for transfer firms, meaning MREL will impose no additional requirements for loss-absorbing capacity for these institutions.
Other changes include reducing the scope of non-Common Equity Tier 1 own funds internal MREL instruments subject to revised policy on contractual triggers, and introducing a more proportionate approach regarding independent eligibility legal opinions for certain issuances.
The Bank of England Resolution and Recapitalisation Act 2025, which recently received Royal Assent, establishes a recapitalisation payment mechanism to support small bank resolution where using a stabilization power for transfer is in the public interest.
All policy changes will take effect from January 1, 2026, with the Bank opting for a single implementation date rather than the staggered approach initially proposed.
The Prudential (LON:PRU) Regulation Authority has also published consultations on amendments to MREL reporting and disclosure requirements as part of a broader package of resolution-related policy announcements.