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.