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Midelatory consulting welcomes the consultation proposals by the Bank of England (BoE) which are aimed at updating its existing policy approach to setting a minimum requirement for own funds and eligible liabilities (MREL).  We believe the proposals, should they become final policy, represent a markedly positive shift in the drive to reduce barriers to entry and promote competition in the UK banking sector.

We strongly support the BoE’s proposals to significantly increase the timeline required for complying with MREL for newly affected firms and to address the cliff-edge effects inherent in its existing MREL Policy.  We also strongly support the BoE’s proposals around the thresholds for triggering the resolution strategies that lead to the imposition of MREL i.e. Partial Transfer and Bail-in resolution strategies. In particular, we welcome the proposal to replace the current indicative total assets range with a single indicative total assets metric, and the possibility to significantly raise or remove the transactional accounts threshold.

Finally, we suggest some areas where we think the BoE should consider additional changes to the MREL regime.