Featured Product

    Sebastiano Laviola of SRB Outlines Next Steps for MREL Policy

    June 17, 2020

    In a recent article, the SRB Board Member Sebastiano Laviola outlined the next steps with respect to minimum requirements for own funds and eligible liabilities (MREL) policy. SRB updated its MREL policy last month resulting in changes to the deadlines for binding MREL targets. SRB will decide on the level of MREL that institutions should hold in its 2020 resolution planning cycle. These decisions, which will be communicated to banks in early 2021, will include two binding MREL targets—the binding intermediate target to be met by January 01, 2022 and the MREL (final target) to be met by January 01, 2024. The decisions will reflect changing capital requirements and will be calibrated taking the most recent information into account, where relevant.

    The article highlights that the new MREL targets allow SRB to take a forward-looking approach to banks that may face short-term difficulties in meeting the existing targets set in earlier cycles, due to the COVID-19 crisis. SRB is committed to the continued build-up of MREL, while ensuring that short-term MREL constraints do not prevent banks from lending to businesses and households. The article also states that MREL is being steadily built up in quantity and quality over time. While the COVID-19 crisis has caused severely reduced new issuances in March and April, there have been signs of recovery in recent weeks. Progress on MREL requirements means banks are more resolvable. SRB aims to set ambitious but realistic objectives for the build-up of MREL quantity and quality, taking the situation of financial markets and market capacity into consideration where needed. This loss-absorbing capacity is vital for strengthening resolvability, and, in turn, financial stability.

    The updated MREL policy, published last month, implements the new requirements in the 2019 Banking Package, which introduced a number of risk-reducing measures for the financial sector. The updated policy introduces changes to MREL requirements for large global systemically important banks, integrating the global standard for total loss-absorbing capacity (TLAC). There are changes to the way it is calculated and in its quality (subordination). It also sets out dedicated rules for different business models, such as cooperatives, and resolution strategies, such as multiple-point-of-entry (MPE).

     

    Related Link: Article by SRB Board Member

     

    Keywords: Europe, EU, Banking, MREL, Banking Package, COVID-9, TLAC, Resolution Planning, Resolution Framework, Regulatory Capital, SRB

    Featured Experts
    Related Articles
    News

    BCBS Amends Guidelines on Sound Management of AML/CFT Risks

    BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).

    July 02, 2020 WebPage Regulatory News
    News

    EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR

    EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).

    July 01, 2020 WebPage Regulatory News
    News

    FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform

    FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS Publishes List of Internationally Active Insurance Groups

    IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.

    July 01, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act

    FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).

    July 01, 2020 WebPage Regulatory News
    News

    EC Launches Consultation on Review of Solvency II Directive

    EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.

    July 01, 2020 WebPage Regulatory News
    News

    ECB Consults on Supervisory Approach to Consolidation in Banking

    ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.

    July 01, 2020 WebPage Regulatory News
    News

    PRA Letter Sets Expectations on Approach to Managing Climate Risks

    PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.

    July 01, 2020 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Swap Margin Rule

    US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.

    July 01, 2020 WebPage Regulatory News
    News

    IAIS on Package for 2020 Data Collection on ICS and Aggregation Method

    IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.

    June 30, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5425