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

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153