January 16, 2019

SRB published the second part of its 2018 policy on the minimum requirement for own funds and eligible liabilities (MREL) pertaining to the second wave of resolution plans. The second wave of resolution plans cover the most complex banking groups. This second part of the 2018 MREL policy introduces a series of new features to strengthen the MREL approach and the resolvability of banks in the Banking Union and prepare banks for future regulatory changes in the context of the “Banking Package.” The main new features are a refined approach for eligible instruments for consolidated MREL-targets, increased binding subordination requirements, and, last but not least, the introduction of binding MREL targets at the individual level.

MREL represents one of the key tools in enhancing resolvability of banks. SRB continues to develop its MREL policy, step-by-step. This gives banks the clarity needed on the SRB requirements for them to build up MREL. SRB will continue to develop its MREL policy going forward. After the adoption of the Banking Package, the SRB policy will need to be adapted to address in particular the total loss-absorbing capacity (TLAC) implementation and the new internal MREL requirements. 

 

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Keywords: Europe, EU, Banking, MREL, Resolution Planning, TLAC Implementation, Banking Union, MREL Policy, SRB

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