Issuing certificates of entitlement in this way will provide a mechanism for debtholders that do not want to, or due to their mandates, are not able to hold equity to trade out of their positions. And this will have an ancillary benefit for us of providing some sort of shadow market valuation of the firm. But what about other liability holders – depositors, market counterparties, trade creditors etc. – during this interval? Our aim with the announcement of the resolution is to send a strong signal to them that their claims are safe and that the operating companies they are transacting with will continue to perform. Full conversion of internal MREL in the key operating companies around the group and a strong sense that the firm will have access to liquidity will contribute to that. To this end, the Bank has established new arrangements to clarify, first, that a firm in resolution would continue to have access to the ordinary central bank facilities in the Sterling Monetary Framework, subject to meeting the necessary eligibility criteria. And second, those arrangements will be supplemented where necessary by a flexible Resolution Liquidity Framework, designed to provide liquidity, in sterling or foreign currency, in the necessary scale, for a sufficient period of time, and secured against a wide range of collateral to allow the firm to make the transition to market-based funding.
Rather, it is our intention to take several months for the bail-in valuation to ensure that through an independent valuation process, losses as far as possible are bottomed out and tie back to the reorganisation plan for the surviving business. It will be critical to determine the net asset value that had been generated in the bail-in and the liability holders it should go to as compensation. You may ask, what happens in the intervening period? From the perspective of the debt investor, our intention on entry to resolution is to take control of the shares in issue and immobilise all the other external  12  The Bank of England published a consultation paper on valuation capabilities to support resolvability on 17 August 2017. See https://www.bankofengland.co.uk/-/media/boe/files/financial-stability/resolution/boes-proposed-policy-on-valuation-capabilities-tosupport-resolvability.pdf?la=en&hash=4044F91DF1DDE7A131EA3186F66F304380553306 . 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  MREL instruments at the relevant international central securities depository (ICSDs) and central securities depository (CSDs). We will at the same time issue onto the bondholders accounts at the ICSDs a tradeable certificate of entitlement secured by the shares in issue. There will be as many classes of certificate as there are classes of claim. Once the valuation is complete and we have announced the terms of exchange, holders will present the certificates in exchange for whatever equity they are entitled to as compensation. The resulting shareholders will then vote in a new board and the firm will return to private sector control.