The Single Resolution Board (SRB) updated policy on the minimum requirements for own funds and eligible liabilities (MREL) and submitted its response to the European Commission’s targeted consultation on the evaluation of State aid rules for banks in difficulty. SRB also released a set of documents detailing how and why it came to the conclusions it did when Sberbank failed in Austria, Slovenia, and Croatia.
The updated MREL policy takes into account new regulatory developments, such as the end of the supervisory leverage relief measures of the European Central Bank as well as changes to the Capital Requirement Regulation (CRR) agreed by the European Union co-legislators on the indirect holding of internal MREL (iMREL) and the MREL calibration for banks with a multiple point-of-entry resolution strategy. The updated policy has also further enlarged the coverage of entities under internal MREL and made the subordination policy more dynamic, taking into account the evolving balance sheets prior to resolution. It also complements the SRB approach to internal MREL waiver applications in a new annex. The policy has been revised based on experience gained and stakeholder feedback and applies to the 2022 resolution planning cycle.
The consultation on evaluation of State aid rules aimed to assess the extent to which the State aid rules for banks in difficulty preserved financial stability, while minimizing competition distortions. This targeted consultation contains 46 high-level and more detailed technical questions, grouped by the five evaluation criteria under consideration—effectiveness, efficiency, relevance, coherence, and the European Union value addition of the State aid rules for banks in difficulty. The consultation is most suitable for stakeholders (such as market participants, public authorities and academics) with more specific expertise and experience in State aid rules for banks in difficulty. The period under consideration starts with the outbreak of the 2008 financial crisis and goes up to the end of 2021. Through this consultation, the European Commission aims to evaluate how these State aid rules contributed to tackling moral hazard through burden-sharing measures and how they mitigated competition distortions stemming from the granting of aid. The evaluation will assess to which extent the State aid rules for banks ensured the effective restructuring of viable banks and orderly market exit of unviable banks in a context in which one or several banks were in difficulty. The evaluation will also assess to which extent the current rules are still fit for purpose, including in the context of the new regulatory environment, and whether there is potential to simplify these rules and improve their interaction with the Crisis Management and Deposit Insurance (CMDI) framework.
- Press Release on Updated MREL Policy
- MREL Policy 2022 (PDF)
- Press Release on State Aid Rules
- SRB Response to Evaluation of State Aid Rules (PDF)
- Press Release on SRB Documents on Sberbank
Keywords: Europe, EU, Banking, MREL, MREL Policy, CRR, Basel, Regulatory Capital, Resolution Planning, Sberbank, Internal MREL, Resolution Framework, State Aid Rules, EC, SRB
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