Recapitalisation amount: Difference between revisions
imported>Doug Williamson (Create the page. Source: BoE http://www.bankofengland.co.uk/financialstability/Documents/resolution/mrelconsultation2015.pdf) |
imported>Doug Williamson (Classify page.) |
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''Bank | ''Bank resolution and recovery - capital adequacy''. | ||
The recapitalisation amount is the component of a bank's Minimum Requirement for own funds and Eligible Liabilities (MREL) which is considered necessary for recapitalisation after resolution. | The recapitalisation amount is the component of a bank's Minimum Requirement for own funds and Eligible Liabilities (MREL) which is considered necessary for recapitalisation after resolution. | ||
MREL comprises the total of a bank's: | MREL itself comprises the total of a bank's: | ||
*Loss absorption amount; and | *Loss absorption amount; and | ||
*Recapitalisation amount. | *Recapitalisation amount. | ||
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On the other hand, smaller and simpler banks would not normally need any recapitalisation amount - because in resolution they would become insolvent, with no need to resume operations and no need for capital following the insolvency. | On the other hand, smaller and simpler banks would not normally need any recapitalisation amount - because in resolution they would become insolvent, with no need to continue or resume operations and therefore no need for capital following the insolvency. | ||
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*[[MREL]] | *[[MREL]] | ||
*[[Recapitalise]] | *[[Recapitalise]] | ||
* [[Recovery]] | |||
*[[Resolution]] | *[[Resolution]] | ||
*[[Total Loss Absorbing Capacity]] | *[[Total Loss Absorbing Capacity]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:The_business_context]] | |||
Latest revision as of 08:05, 2 July 2022
Bank resolution and recovery - capital adequacy.
The recapitalisation amount is the component of a bank's Minimum Requirement for own funds and Eligible Liabilities (MREL) which is considered necessary for recapitalisation after resolution.
MREL itself comprises the total of a bank's:
- Loss absorption amount; and
- Recapitalisation amount.
The recapitalisation amount is most relevant for large complex banks, for which bailin is the likely resolution path.
Such banks would generally have a recapitalisation amount equal to the current minimum capital requirement.
On the other hand, smaller and simpler banks would not normally need any recapitalisation amount - because in resolution they would become insolvent, with no need to continue or resume operations and therefore no need for capital following the insolvency.
