On 7 October 2022, the European Banking Authority (EBA) has issued its latest monitoring report regarding total loss-absorbing capacity and minimum requirement for own funds and eligible liabilities (TLAC/MREL).  The report provides policy views based on TLAC/MREL instruments assessed up to February 2022 with a view to continue strengthening the quality of the instruments and to have more standardised information across the EU.

In light of its observations the EBA has included new parts in the report and these include those covering make-whole clauses (to be disallowed), clean up calls (to be allowed) and substitution and variation clauses (for which prior approval is needed in certain circumstances). The EBA has also updated some sections of the report, notably those dealing with netting and set-off waivers and dual governing law / bail-in. Also, the observations on environmental, social and governance instruments included in the previous report have been removed since the EBA’s recommendations were published in the latest AT1 monitoring report.