Featured Product

    SRB Issues Guidance on Permission Regime for MREL-Eligible Liabilities

    December 18, 2020

    SRB published guidance clarifying what will happen once the minimum requirement for own funds and eligible liabilities (MREL) decisions under the revised Single Resolution Mechanism Regulation (SRMR2) are communicated by national resolution authorities. SRB also provides an update on the treatment of General Prior Permissions currently in place. With this, SRB has updated its approach to the prior permission regime for early calling, redeeming, repaying, or repurchasing of eligible liabilities instruments by banks, ahead of the upcoming key regulatory changes.

    The recent SRB guidance aims to explain and inform institutions under the direct SRB remit about two regulatory changes that require SRB to adapt its current permission regime procedure for calling, redeeming, repaying or repurchasing eligible liabilities instruments ahead of their maturity. The first regulatory change relates to the application of SRMR2 on December 28, 2020, with new MREL-eligibility criteria applying to liabilities that qualify for MREL. The regulation expands the scope of liabilities subject to the permission regime to all MREL eligible liabilities (including senior unsecured liabilities and internal MREL eligible liabilities) and to liabilities that are eligible for internal MREL. The guidance explains that, until the new MREL decisions adopted by SRB on the basis of the SRMR2 are communicated to institutions by the national resolution authorities, the existing MREL decisions taken on the basis of SRMR1/BRRD1 remain valid. After the communication of the SRMR2 MREL decisions by national resolution authorities, the transitional period set out in Article 12k of the SRMR2 will start and institutions will not need to apply for for early redemptions of MREL-eligible liabilities taking place until December 31, 2021. However, for redemptions of MREL-eligible liabilities to be performed after December 31, 2021, institutions will need to submit applications to the SRB four months in advance (for example, to perform a redemption as of January 01, 2022, an institution will need to submit an application to SRB at the latest by August 31, 2021).

    The second regulatory change is the forthcoming Level 2 legislation on the permission regime. EBA is mandated under Article 78a(3) of the revised Capital Requirements Regulation (CRR2) to draft regulatory technical standards specifying the process for prior permission, including information requirements for permission applications and the timeframe for resolution authorities to assess applications. The EBA standards on the procedure applicable to early redemptions will have an impact on the current policy and procedure of SRB. SRB will continue to assess all new applications based on its current policy and procedure until the Delegated Regulation endorsing the EBA regulatory technical standards applies. SRB will use the statutory transitional period set out in SRMR2 to integrate the new elements of the Delegated Regulation into its policy and procedure, so that the updated permission regime can be operational as of January 01, 2022. SRB expects all applications for permission to include projections on total loss-absorbing capacity (TLACfor the following three years.

     

    Related Links

    Keywords: Europe, EU, Banking, MREL, Resolution Framework, SRMR2, Permission Regime, CRR2, Basel, TLAC, Regulatory Capital, EBA, SRB

    Featured Experts
    Related Articles
    News

    EC Rule on Contractual Recognition of Write Down and Conversion Powers

    The European Commission (EC) published the Delegated Regulation 2021/1527 with regard to the regulatory technical standards for the contractual recognition of write down and conversion powers.

    September 17, 2021 WebPage Regulatory News
    News

    APRA Issues Further Guidance on Application of Securitization Standard

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to provide guidance to authorized deposit-taking institutions on the interpretation of APS 120, the prudential standard on securitization.

    September 16, 2021 WebPage Regulatory News
    News

    SRB Provides Update on Approach to Prior Permissions Regime

    The Single Resolution Board (SRB) published a Communication on the application of regulatory technical standard provisions on prior permission for reducing eligible liabilities instruments as of January 01, 2022.

    September 16, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQs on Capital Treatment of Overseas Subsidiaries

    The Australian Prudential Regulation Authority (APRA) published a new set of frequently asked questions (FAQs) to clarify the regulatory capital treatment of investments in the overseas deposit-taking and insurance subsidiaries.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Guidance to Assess Breaches of Large Exposure Limits

    The European Banking Authority (EBA) published the final report on the guidelines specifying the criteria to assess the exceptional cases when institutions exceed the large exposure limits and the time and measures needed for institutions to return to compliance.

    September 15, 2021 WebPage Regulatory News
    News

    PRA Finalizes Changes to Consolidated Prudential Rules Under CRD5/CRR2

    The Prudential Regulation Authority (PRA) issued the policy statement PS20/21, which contains final rules for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies.

    September 15, 2021 WebPage Regulatory News
    News

    EBA Revises Guidelines on Stress Tests of Deposit Guarantee Schemes

    The European Banking Authority (EBA) revised the guidelines on stress tests to be conducted by the national deposit guarantee schemes under the Deposit Guarantee Schemes Directive (DGSD).

    September 15, 2021 WebPage Regulatory News
    News

    Nordea Bank and EIB Sign Agreement to Fund Green Projects in Nordics

    The European Commission (EC) announced that Nordea Bank has signed a guarantee agreement with the European Investment Bank (EIB) Group to support the sustainable transformation of businesses in the Nordics.

    September 15, 2021 WebPage Regulatory News
    News

    HKMA Endorses Industry Guidance to Support LIBOR Transition

    The Hong Kong Monetary Authority (HKMA) issued a circular, for all authorized institutions, to confirm its support of an information note that sets out various options available in the loan market for replacing USD LIBOR with the Secured Overnight Financing Rate (SOFR).

    September 14, 2021 WebPage Regulatory News
    News

    OCC Issues Booklet on Supervision of Problem Banks

    The Office of the Comptroller of the Currency (OCC) issued a new "Problem Bank Supervision" booklet of the Comptroller's Handbook. The booklet covers information on timely identification and rehabilitation of problem banks and their advanced supervision, enforcement, and resolution when conditions warrant.

    September 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7481