The following Financial Services guidance note Produced in partnership with Nicholas Mead of KPMG provides comprehensive and up to date legal information covering:
The origins of Minimum Requirements for Own Funds and Eligible Liabilities (MREL) lie in the hard lessons learned during the financial crisis. When the crisis hit and the scale of the losses incurred by the large international banks was fully realised, global regulators faced two inter-linked dilemmas:
the operations of these banks were so complex that regulators did not fully understand the economic impact of allowing them to fail, and
these banks did not have sufficient resources to allow regulators to carry out an orderly wind-up of their operations with minimal loss to depositors
As a result, banks across the world received governmental support, and ultimately taxpayer bail-out, in order to avoid financial collapse. The thrust of international regulation since the crisis has concentrated on identifying solutions to avoid this situation occurring in the future.
One of the solutions is to ensure that banks have sufficient financial resources at their disposal to allow an orderly resolution of their operations at the point of failure—so called ‘gone concern’ resources. In this way the cost of resolution is internalised rather than transferred to taxpayers as was the case during the crisis.
Proposals to ensure that banks have sufficient gone concern loss absorbency have come from a number of fronts—in the UK the concept was
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234