EBA proposed implementing technical standards that specify uniform reporting templates, instructions, and methodology for identification and transmission of information on minimum requirements for own funds and eligible liabilities (MREL). The previous technical standards on MREL reporting from resolution authorities to EBA will be substituted by these new draft technical standards, to account for the changes introduced through the revised Bank Recovery and Resolution Directive or BRRD2 (2019/879/EU). The consultation runs until October 24, 2020. EBA also published the draft reporting template and instructions as annexes to the consultation paper.
The resolution authorities must use the specified templates and instructions when transmitting information regarding the MREL requirements to EBA. Reporting by institutions to resolution or competent authorities is outside of the scope of this reporting framework.The templates laid down in the Annexes to the technical standards provide for reporting on each component of the decision in compliance with the methodology laid down in BRRD. This information will help EBA in monitoring and promoting the consistent application of the legal framework on MREL. If the 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, a 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. However, where MREL has not been waived, that the recapitalization amount has been set to zero but that the loss-absorbing amount has been adjusted, the draft implementing standards provide for full reporting
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 relevant competent authorities, shall ensure that institutions meet at all times a minimum requirement for own funds and liabilities eligible for bail-in. BRRD has been amended by BRRD2 to include provisions detailing the 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 the criteria laid down in the BRRD, as amended. The draft technical standards substitute the previous technical standards on MREL reporting, to properly reflect the changes introduced in the BRRD2.
Comment Due Date: October 24, 2020
Keywords: Europe, EU, Banking, Reporting, MREL, Resolution Authorities, Loss-Absorbing Capacity, Implementing Technical Standards, Basel, BRRD2, EBA
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.