On 26 May 2021, the Single Resolution Board updated its ‘Minimum Requirements for Own Funds and Eligible Liabilities (MREL) Policy under the EU Banking Package’. The updated policy includes:

  • The MREL maximum distributable amount. This allows the SRB to restrict banks’ earnings distribution if there are MREL breaches.
  • Policy criteria to identify systemic subsidiaries for which granting of an internal MREL waiver would raise financial stability concerns (based on the absolute asset size and relative contribution to resolution group).
  • The approach to MREL-eligibility of UK instruments without bail-in clauses.

The updated policy also refines the:

  • Methodology to estimate the Pillar 2 requirements post-resolution, i.e. one of the components used for MREL calibration.
  • MREL calibration on preferred vs variant resolution strategy, confirming that the SRB computes MREL in line with the preferred strategy.
  • MREL calibration methodology for liquidation entities, where the SRB clarifies that the loss absorption amount may increase beyond the default adjustment in proportion to financial stability concerns.

The SRB has also published its MREL dashboard covering the reporting period Q4.2020.

Leave a Reply

Your email address will not be published. Required fields are marked *