EBA Proposes MREL Reporting Standards Under BRRD2
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.
Related Link
Comment Due Date: October 24, 2020
Keywords: Europe, EU, Banking, Reporting, MREL, Resolution Authorities, Loss-Absorbing Capacity, Implementing Technical Standards, Basel, BRRD2, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Related Articles
EBA Guide to Monitor Threshold for Intermediate Parent Undertakings
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
ESMA Group Issues Recommendations on RFR Switch in Interdealer Market
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
EC to Defer Application of SFDR Standards Till July 2022
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
EIOPA Consults on Reporting and Disclosures Under Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
