BaFin published a draft circular on determination of the minimum requirement for own funds and eligible liabilities (MREL) for institutions and group companies for which the wind-up plan provides for liquidation in the context of insolvency proceedings. This circular will replace the previous MREL circular that was published in August 2019. The main changes in the circular are based on the Risk Reduction Act (RiG), which came into force on December 28, 2020. The Risk Reduction Act contains new regulations for calculating MREL, among other things. The draft circular describes the administrative practice of BaFin with regard to the determination of MREL provided by Article 12 of Single Resolution Mechanism Regulation or SRMR (806/2014). BaFin is requesting comments until June 30, 2021.
In addition, BaFin is consulting on a circular on the application of the EBA guidelines on tri-party repurchase agreements (EBA/GL/2021/01). The EBA guidelines specify conditions for the application of the alternative treatment of exposures related to tri-party repurchase agreements for large exposure purposes, as set out in the Capital Requirements Regulation (CRR). BaFin intends to incorporate guidelines into its administrative practice by June 28, 2021. BaFin is requesting opinion until June 16, 2021.
Related Links (in German)
- Notification on MREL Circular
- Consultation on MREL Circular
- Notification on Application of EBA Guidelines
- Consultation on Application of EBA Guidelines
Comment Due Date: June 30, 2021 (MREL Circular)/June 16, 2021 (EBA Guidelines)
Keywords: Europe, Germany, Banking, MREL, Resolution Framework, CRR, Repurchase Agreement, Large Exposures, Basel, Credit Risk, SRMR, EBA, BaFin
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