In a recent article, the SRB Chair Elke König offers clarity on the Board's approach to minimum requirements for own funds and eligible liabilities (MREL) targets, in light of the COVID-19 crisis. Regarding the existing binding targets (set in the 2018 and 2019 cycles), during the current crisis, SRB intends to take a forward-looking approach to banks that may face difficulties meeting those targets before new decisions (with 2022 intermediate targets) take effect. The focus will be on the 2020 decisions and targets. SRB requests banks to continue to make all efforts to provide the necessary data on MREL for the upcoming cycle.
The SRB Chair highlights that the banking industry has made substantial progress in building up MREL to date and overall it is in a good position today. Nevertheless, during this challenging period, SRB is committed to ensuring that short-term MREL constraints do not prevent banks from lending to business and the real economy. To achieve this, SRB is working together with the national resolution authorities and the banks under its remit to prepare for the implementation of the 2020 resolution planning cycle, including, the changes to MREL decisions under the new banking package (BRRD2/SRMR2). As part of this cycle, new MREL targets will be set according to the transition period in SRMR2—that is, setting the first binding intermediate target for compliance by 2022 and the final target by 2024. The decisions will be based on recent MREL data, and reflect changing capital requirements.
Related Link: Article by SRB Chair
Keywords: Europe, EU, Banking, MREL, BRRD2, SRMR2, COVID-19, Resolution Framework, Regulatory Capital, Banking Package, SRB
Previous ArticlePRA Explains Supervisory Approach to Credit Unions Amid COVID Crisis
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).