BoE Dear CFO letter on preparation for the third resolvability assessment

The Bank of England (BoE) has issued a Dear CFO Letter setting out information on the third resolvability assessment framework (RAF) assessment. The assessment will evaluate firms' overall ability to meet the three resolvability outcomes, review progress in remediating issues from previous assessments and conduct targeted testing of capabilities under the continuity and restructuring outcome. This assessment will be carried out with an emphasis on testing capabilities in a manner consistent with how the BoE expects to engage with firms during contingency planning, and reflecting lessons from the use of the resolution regime in 2023. The letter highlights the type of targeted testing the BoE intends to conduct, and specific information banks are expected to provide including in their resolution assessment reports by 2 October. As part of the assessment, the BoE also intends to engage with the Accountable Executive and Board Risk Committee chairs to discuss their firms' approach to resolvability.

The letter also gives early notice of a review expected to take place in H2 2026 of the internal minimum requirement for own funds and eligible liabilities (MREL) scalar for ring‑fenced banks (or other entities at the top level of a material sub-group with a ring-fenced bank). This may involve further information requests from the BoE to assess the deployability of MREL resources under paragraph 7.9 of the MREL Statement of Policy. Finally, the BoE has confirmed that subject to the findings of the third assessment, the fourth RAF cycle is not expected to begin before 2029–30.

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