EBA published the final draft implementing technical standards that specify uniform reporting templates, instructions, and methodology for identification and transmission of information, by resolution authorities to EBA, on minimum requirements for own funds and eligible liabilities (MREL). Reporting by institutions to resolution or competent authorities is outside the scope of this reporting framework. The previous technical standards on MREL reporting by resolution authorities to EBA will be replaced by these new draft technical standards, to account for changes introduced by the revised Bank Recovery and Resolution Directive or BRRD2 (2019/879/EU). EBA also published the draft reporting template and instructions as annexes to the final report on draft standards.
The templates laid down in the annexes to the technical standards are to be used for reporting on each component of the decision in compliance with the methodology laid down in the BRRD. This information will help EBA in monitoring and promoting the consistent application of the legal framework on MREL. Where the MREL requirement has been waived in line with the BRRD, no additional information is necessary. If, on the other hand, MREL has not been waived but the recapitalization amount has been set to zero in line with Article 45c(2), second subparagraph, of the BRRD, simplified reporting is allowed. Resolution authorities will set a recapitalization amount equal to zero where the resolvability assessment concludes that liquidation under normal insolvency proceedings is feasible and credible. A zero recapitalization amount is likely to be the case for a significant number of smaller institutions. Where MREL has not been waived, because the recapitalization amount has been set to zero but the loss-absorbing amount has been adjusted, the draft standards require full reporting. Resolution authorities are required, on a best-effort basis, to provide a condensed explanation of the adjustments made to the default MREL amount.
BRRD (2014/59/EU) establishes a framework for the recovery and resolution of credit institutions, investment firms, and related entities. BRRD provides that resolution authorities, in cooperation with the relevant competent authorities, must ensure that institutions meet at all times a MREL. BRRD has been amended by BRRD2 to include provisions detailing new requirements on MREL subordination levels and the MREL applicable to resolution entities and entities that are not resolution entities. MREL must be set for each and every institution based on criteria laid down in the BRRD, as amended. This reporting between resolution authorities and EBA aims to ensure that EBA has all the necessary information to understand how MREL is set within the member states.
- Press Release
- Draft Technical Standards (PDF)
- Reporting Template (XLSX)
- Reporting Instructions (DOCX)
Keywords: Europe, EU, Banking, MREL, Loss Absorbing Capacity, Implementing Technical Standards, Bail-In, Resolution Frameworks, Basel, BRRD2, EBA
Previous ArticleDNB Issues Reporting Updates for Banks, Maintains CCyB at 0%
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.