December 20, 2017

SRB, along with the Banking Union national resolution authorities, published the 2017 policy statement on the minimum requirement for own funds and eligible liabilities (MREL); this policy statement will serve as a basis for setting the consolidated MREL targets for banks under the remit of SRB. The SRB MREL policy reflects the progress made throughout the year on the development of a tailored MREL policy.

MREL represents one of the key tools to improve banks’ resolvability, allowing resolution authorities to maintain critical functions and restore a bank’s capital position after resolution. The policy statement highlights that for the 2017 resolution planning cycle, SRB is moving from informative targets—communicated in the 2016 MREL policy—to bank-specific binding consolidated MREL targets for the majority of the largest and most complex banks under the SRB remit, including all global systemically important institutions and banks with resolution colleges. The MREL computation will remain calibrated for bail-in strategies, until transfer strategy policies are further fine-tuned and operationalized. The SRB MREL policy contains an objective set of criteria in this regard and represents a step toward bank-specific MREL targets.

SRB also adopts a proportionate approach for banks to build their MREL by setting bank-specific transition periods with a maximum horizon of four years, with interim targets for transition periods exceeding two years. The 2017 MREL policy is a new milestone in the improvement of banks’ resolvability and will be further developed in line with the SRB roadmap to MREL. To this extent, SRB will focus in 2018 on three main areas: enhancing the MREL targets based on the outcome of the SRB’s resolvability assessment; refining its location policy within groups and developing a framework for individual and internal MREL; and developing a policy for transfer strategies. 

 

Related Link: Policy Statement on MREL (PDF)

Keywords: Europe, Banking, MREL, Policy Statement, Resolution Planning, SRB

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