On 27 July 2020, the European Banking Authority (EBA) issued a public consultation on draft Regulatory Technical Standards (RTS)  specifying the methods to avoid that instruments indirectly subscribed by the resolution entity for the purpose of meeting the minimum requirement for own funds and eligible liabilities (MREL), applicable to entities that are not themselves resolution entities, hamper the smooth implementation of the resolution strategy. These patterns of indirect subscription are also known as “daisy chains of internal MREL”.

The draft RTS have been developed in accordance with Article 45f(6) of the Bank Recovery and Resolution Directive (BRRD), which mandates the EBA to develop draft RTS further specifying methods to avoid that instruments indirectly subscribed by the resolution entity for the purpose of meeting MREL applicable to entities that are not themselves resolution entities under Article 45f of BRRD hamper the smooth implementation of the resolution strategy.

The consultation runs until 27 October 2020. The finalisation of the draft RTS and communication to the European Commission is planned by December 2020.