Shearman & Sterling LLP | FinReg | European Banking Authority Publishes Consultation on Draft MREL and TLAC Disclosure and Reporting Standards
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  • European Banking Authority Publishes Consultation on Draft MREL and TLAC Disclosure and Reporting Standards
    11/22/2019
    The European Banking Authority has published a consultation paper on its draft Implementing Technical Standards for supervisory reporting and public disclosure of minimum requirements for own funds and eligible liabilities (or “MREL”) and total loss-absorbing capacity (or “TLAC”). Responses to the consultation should be submitted by February 22, 2020. The EBA expects to submit the final draft ITS to the European Commission in June 2020.

    The recent amendments made to EU banking legislation (known as the “banking package”) included amendments to the capital requirements regimes established under the revised Capital Requirements Regulation and the revised Bank Recovery and Resolution Directive. In particular, the calibration of MREL in the BRRD was amended so that a fixed MREL requirement will apply to EU global systemically important institutions, with institution-specific MREL requirements being imposed where appropriate. In addition, the Financial Stability Board’s TLAC standards have been implemented in the EU regime for G-SIIs through changes to CRR II. Transitional TLAC standards under CRR II have applied since June 27, 2019, while the final, more onerous TLAC requirements will be imposed from January 1, 2022. Institutions will be expected to comply with the revised MREL standards from January 1, 2024. In order to demonstrate that institutions are meeting their MREL and TLAC requirements, they must disclose details of, and provide reports on, the regulatory capital they hold. The EBA’s draft ITS set out the proposals for implementing these disclosure and reporting requirements. In particular, the draft ITS set out the reporting and disclosure templates that institutions should use to provide information about their MREL and TLAC instruments and determine the frequency with which reporting and disclosure should be carried out. Reporting templates should be submitted on a quarterly basis while disclosure templates submissions vary depending on whether they are made in respect of TLAC or MREL and by G-SIIs or non-G-SIIs. The draft ITS also envisage a harmonized format for the list of insolvency rankings to be prepared for each Member State.

    View the EBA's Consultation Paper.

    View details of the revised Capital Requirements Regulation.

    View details of the revised Bank Recovery and Resolution Directive

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