Eurozone Single Resolution Board Publishes Policy Statement on Second Wave of 2018 MREL Policy

The Eurozone Single Resolution Board has published the second wave of its 2018 minimum requirements for own funds and eligible liabilities as part of resolution planning required under the Bank Recovery and Resolution Directive and related Single Resolution Mechanism Regulation. The SRB published the first wave of the 2018 MREL requirements in November which applied to banks that did not have binding MREL targets in 2017. The second wave applies to the most complex banking groups and introduces a series of new features to strengthen banks’ resolvability. Key new features include:
 

• A requirement that only liabilities issued directly by the resolution entity will be considered eligible to meet consolidated targets;
• Binding subordination requirements for all banks with a consolidated target, at increased levels;
• Adjustments of the recapitalization amount to reflect the transfer of assets, representing an interim step towards a more tailored, bank-specific approach; and
• Issuance of binding targets at the individual level of subsidiaries of banking groups, prioritising the most relevant entities.

The new requirements are made in anticipation of the EU’s ‘Banking Package’, a series of changes to the Capital Requirements Regulation, BRRD and the SRMR intended to be brought into force in 2019 that will, among other things, amend the MREL framework and implement the EU’s total loss absorbing capacity framework.

View the SRB Policy Statement on Second Wave of 2018 MREL Policy.

View details of the first wave of the SRB’s 2018 MREL Policy.

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