New MREL reporting instructions for UK banks from January 2027
The Prudential Regulation Authority (PRA) has published updated instructions and templates for Minimum Requirement for Own Funds and Eligible Liabilities (MREL) reporting. These amendments, effective from 1 January 2027, require firms to submit their first reports in February 2027 for the period ending 31 December 2026.
Clarifying MREL reporting for UK firms
The Prudential Regulation Authority (PRA) has issued consolidated instructions and templates to assist firms in preparing accurate Minimum Requirement for Own Funds and Eligible Liabilities (MREL) reporting.
This document, effective from 1 January 2027, specifically addresses templates MRL001 (MREL Resources) and MRL003 (MREL Debt), which are integral to the PRA's supervisory statement (SS) 19/13 on Resolution Planning.
Firms are required to make their first submissions in February 2027, covering the reporting period ending 31 December 2026.
The guidance clarifies the scope of instruments that qualify for MREL, including Additional Tier 1 (AT1) and Tier 2 capital instruments, as well as various eligible and non-eligible liabilities.
It also provides essential definitions for terms such as 'MREL resources', 'external MREL', and 'internal MREL', ensuring a consistent understanding across the regulated entities.
Detailed guidance for MRL001 and MRL003
The instructions detail the completion of MRL001 and MRL003 templates, specifying reporting for various own funds and eligible liabilities.
For MRL001, firms must provide amounts and maturity profiles for MREL-qualifying own funds, eligible liabilities, and certain non-qualifying liabilities.
Specific guidance covers AT1 and Tier 2 capital instruments, including residual maturity rules.
It also clarifies reporting for subordinated and senior unsecured eligible liabilities, as well as non-qualifying liabilities that rank pari passu.
Thresholds are set for reporting non-qualifying liabilities as a proportion of external and internal MREL resources.
Additionally, firms must complete a general information cover page with entity details, FRN, LEI, reporting basis, period dates, currency, and contact information.
Ensuring robust resolution frameworks
This policy statement represents a crucial technical update, streamlining the reporting process for banks' MREL requirements.
By consolidating and clarifying instructions, the PRA aims to enhance the accuracy and consistency of data essential for effective resolution planning.
While seemingly administrative, these detailed amendments are vital for maintaining financial stability and ensuring that firms can be resolved without taxpayer intervention.