1
Introduction
1.1
This supervisory statement (SS) is aimed at Prudential Regulation Authority (PRA)-regulated banks, building societies and PRA designated investment firms (firms).
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1.2
This statement sets out the PRA’s expectations on the relationship between the minimum requirement for own funds and eligible liabilities (MREL) and both capital and leverage ratio buffers, as well as the implications that a breach of MREL would have for the PRA’s consideration of whether a firm is failing, or likely to fail, to satisfy the Threshold Conditions.
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1.3
This SS provides further detail in relation to the high level expectations outlined in ‘The PRA’s approach to banking supervision’.[1] As set out in the approach document, firms are expected to engage directly with policy material, including SSs, and determine — bearing in mind the overarching principle of safety and soundness — whether they meet the PRA’s expectations.
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1.4
This SS should be read in conjunction with the Bank of England’s (the Bank’s) statement of policy on its approach to setting MREL[2] and PRA SSs on risk-weighted capital buffers[3] and leverage buffers.[4]
Footnotes
- 2. June 2018: https://www.bankofengland.co.uk/paper/2018/boes-approach-to-setting-mrel-2018.
- 3. See SS6/14 ‘Implementing CRD IV: capital buffers’, April 2014: www.bankofengland.co.uk/prudentialregulation/publication/2014/implementing-crdiv-capital-buffers-ss, and SS31/15 ‘The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)’, July 2015: www.bankofengland.co.uk/prudentialregulation/publication/2013/the-internal-capital-adequacy-assessment-process-and-supervisory-review-ss.
- 4. See SS45/15 ‘The UK leverage ratio framework’, December 2015: www.bankofengland.co.uk/prudentialregulation/publication/2015/the-uk-leverage-ratio-framework-ss.
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