European Banking Authority Consults on Technical Standards on Pillar 2 and Combined Buffer Requirements for MREL under BRRD07/24/2020The European Banking Authority has launched a consultation on its draft Regulatory Technical Standards for the methodology that EU resolution authorities should use to estimate the Pillar 2 and combined buffer requirements used to set the minimum requirement for own funds and eligible liabilities under the EU Bank Recovery and Resolution Directive. Responses to the consultation should be submitted by October 24, 2020. The draft RTS are intended to be finalized by December 2020.
Under BRRD, so-called "resolution entities" (i.e. banks with resolution plans that provide for resolution action) must comply with MREL on a consolidated basis at "resolution group" level (broadly being the resolution entity and its subsidiaries, other than those subsidiaries that are resolution entities themselves or subsidiaries of other resolution entities). However, an aspect of the calculation of MREL is based, for some resolution entities, on prudential group level calculations, where the prudential "group" differs from the resolution group. The EBA's proposed technical standards set out a methodology designed to improve the calibration of MREL at resolution group level, where the resolution group differs from the prudential group, while also minimizing the burden on resolution authorities.
BRRD's provisions on MREL were amended under BRRD 2, the amending Directive that came into force in June 2019. EU Member States are required to transpose BRRD 2 into their national laws and apply the provisions by no later than December 28, 2020, except for certain provisions relating to MREL, which apply from January 1, 2024. HM Treasury has confirmed that, as the implementation of MREL provisions is not required until 2024 after the end of the Brexit transition period, the U.K. intends to exercise its discretion about whether to transpose those requirements.
The EBA is separately consulting on draft Regulatory Technical Standards and Implementing Technical Standards on the impracticability of contractual recognition of write-down and conversion powers as set out under BRRD.
View the EBA's consultation on technical standards for Pillar 2 and combined buffer requirements for the purposes of MREL under BRRD.
View HM Treasury's consultation on the transposition of BRRD II.
View details of the EBA's consultation on technical standards on the impracticability of contractual recognition of write-down and conversion powers.
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