SRB updated its policy on minimum requirement for own funds and eligible liabilities (MREL) as a result of the revisions in the recent Banking Package. The package includes the revised Capital Requirements Directive (CRD V or EU Directive 2019/878), the revised Capital Requirements Regulation (CRR 2 or Regulation 2019/876), the revised Bank Recovery and Resolution Directive (BRRD 2 or Directive (EU) 2019/879), and the revised Single Resolution Mechanism Regulation (SRMR II or Regulation (EU) 2019/877). This policy update is an addendum to the 2018 SRB MREL policy for the second wave of resolution plans, which was published on January 16, 2019. The policy update covers the CRR 2 provisions , which will become applicable on June 27, 2019.
The policy update applies to all institutions for which MREL decisions have or will be taken for the 2018 and 2019 resolution planning cycles. The addendum is intended to inform institutions in the SRB remit about regulatory changes in CRR 2 in the area of resolution and their interaction with the MREL decisions of SRB. With this addendum, SRB is also informing institutions about the implementation of CRR provisions related to the total loss-absorbing capacity (TLAC) requirements for global systemically important institutions (G-SIIs) as well as the permission regime under Article 78a of CRR, which is applicable to all institutions.
The major elements of the new MREL framework, other than the TLAC requirement, will become applicable on December 28, 2020. National transposition and application of BRRD 2 by member states will also be due by December 28, 2020. Until then, MREL decisions issued by SRB, including any applicable transition periods, will be based on the current legal framework of SRMR (Regulation No 806/2014) and BRRD (Directive 2014/59/EU), implemented via the 2018 MREL policy of SRB for the second wave of resolution plans. SRB intends to publish, by the beginning of 2020, the "MREL Policy 2020,” which will form the basis for MREL setting under the new framework of BRRD 2/SRMR 2 for all institutions in the resolution planning cycle starting in 2020. SRB expects to communicate these future MREL decisions to banks in early 2021.
Effective Date: June 27, 2019
Keywords: Europe, EU, Banking, MREL, TLAC, G-SII, Basel III, Systemic Risk, Resolution Framework, CRR2, SRMR2, BRRD2, SRB
Previous ArticlePRA Consults on PRA110 Reporting Frequency Threshold
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.