On 14 May 2024, the Single Resolution Board (SRB) published a paper that sets out its updated policy on the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). The policy has been updated as a result of the experience obtained during the 2020 resolution planning cycle. The regulatory framework for MREL was revised in 2019 through amendments to the Bank Recovery and Resolution Directive, the Regulation establishing the Single Resolution Mechanism, the Capital Requirements Directive Regulation (CRR) and the Capital Requirements Directive IV.

The updated MREL policy introduces certain changes including a revised approach on internal and external Market Confidence Charge calibration and on the monitoring of MREL eligibility. It also reflects the legislative changes on the MREL framework related to entities in a ‘daisy chain’ and to liquidation entities introduced by Directive 2024/1174. The SRB has published a track changes version of its latest policy on MREL compared to its previous policy.

The SRB feedback statement provides further detail on the outcomes of the SRB’s earlier consultation on updating its MREL policy. The SRB received 18 responses from banking associations, banks and public institutions. The feedback statement summarises the main comments raised by the respondents and sets out how they have been addressed.

Dominique Laboureix, the Chair of the SRB, said “The 2024 MREL policy introduces several targeted modifications to address stakeholders’ comments and legislative changes. With these changes, the MREL policy is expected to be stable in the coming years, all other things equal…The public consultation is a good example of the SRB’s new strategy to ensure better transparency and enhance the dialogue with stakeholders”.

The SRB also published its Q4 2023 MREL dashboard presenting the evolution of MREL targets and shortfalls in the quarter as well as the current level and composition of MREL resources. The report shows that all the banks subject to targets with a deadline on 1 January 2024 were well placed to meet them. In addition, it highlights recent developments in the cost of funding and provides an overview of gross issuances of MREL-eligible instruments. 

Alongside the paper the SRB advises readers to read: the SRB’s addendum on new CRR requirements published on 25 June 2019 and updated on 18 December 2019 informing institutions of the implementation of CRR provisions relating to total loss absorbing capacity requirements for global systemically important institutions; the prior permission regime under Article 78a CRR applicable to all institutions; and the communication on the SRB’s permission regime on reduction of eligible liabilities.