European Banking Authority Finalizes Technical Standards on MREL Reporting by Resolution Authorities

The European Banking Authority has published final draft Implementing Technical Standards setting out the common templates to be used and the procedures to be followed by resolution authorities when reporting to the EBA the minimum requirement for own funds and eligible liabilities (MREL) that has been set for each financial institution in their jurisdiction. The MREL requirement is the EU equivalent, in the Bank Recovery and Resolution Directive, of the standard for total loss-absorbing capacity (TLAC) set by the Financial Stability Board. The TLAC standard is the minimum amount of loss-absorbing capital an institution needs to hold so that bail-in tools can be deployed successfully on a resolution.

The EBA envisages that resolution authorities will use common templates to report the overall amount of MREL required from an institution, as well as each of the components of MREL, following the methodology set out in the Regulatory Technical Standard on MREL. Where a resolution authority wishes to depart from the common templates and the prescribed methodology, the authority will be required to provide an explanation of the adjustments made. This common format for reports will enable the EBA to monitor consistency in the application of the MREL framework across the EU and help assess any divergences in the levels of MREL set for comparable institutions across EU Member States.

The final draft ITS have been submitted to the European Commission, which has three months to consider whether to adopt them via a delegated act.

View the EBA Final Report (EBA/ITS/2017/06) and Templates (Annexes I-III to the Final Report).