MREL/TLAC

Abstract This chapter addresses the related concepts of minimum requirements for own funds and eligible liabilities (MREL) and total loss absorbing capacity (TLAC), which represent a major cross-over point between capital adequacy and resolution-related regulations. In many respects, they function as capital adequacy requirements, but their origin lies in the development of modern bank resolution-driven regulation. The purpose of MREL/TLAC requirements is to ensure that banks and other firms have, at all times, sufficient outstanding liabilities that could be bailed-in, if the need were to arise, whilst leaving the post-resolution entities with sufficient capital to continue business and work towards a full recovery. The chapter then looks at the basis on which such MREL/TLAC requirements are set, and satisfied. Most importantly, it examines how such requirements drive the internal financial structures of modern bank, and many other financial services, groups.