MREL

Minimum Requirement for own funds and Eligible Liabilities (MREL)

Context

The  Single  Resolution  Board  (SRB)  is  the  resolution  authority for participating  Member States within the  Banking  Union  (BU).  It began operating as an  independent  European Union (EU) agency on 1 January 2015. The SRB assumed its full legal powers for resolution planning and resolution decisions on 1 January 2016. Its primary scope covers significant and cross-border banking groups established in the BU.

The  Bank  Recovery  and  Resolution  Directive  (BRRD), which  has  been  transposed in  all participating Member  States,  requires  banks  to meet a  minimum  requirement  for  own funds  and  eligible  liabilities  (MREL) so  as  to  be  able to  absorb  losses  and  restore  their capital position, allowing banks to continuously perform their critical economic functions during and after a crisis.

To achieve this outcome,  the  SRB, together  with  the  BU  national  resolution  authorities (NRAs), started  to  develop  its  MREL  approach  in  2016.  This  preliminary  approach consisted of informative targets that sought to enable banks to prepare for their future MREL requirements. The SRB is further enhancing its gradual MREL multi-year policy, and in 2017 introduced binding requirements and started to address both the quantity and quality of MREL with bank-specific features. 

 

Going forward

During 2017, the SRB developed its MREL policy, starting to develop binding targets for major banking groups. Looking forward to 2018, these targets will be defined, with an increased focus on quality and internal location of MREL, in particular ensuring that there are sufficient subordinated instruments to implement banks’ preferred resolution strategies.

Looking further, beyond 2018, decisions on MREL will be regularly updated in the light of possible changes in the structures and degrees of riskiness of banks, as well as keeping up to date with potential regulatory developments. 

2017 Documents

2016 Documents

Other Documents

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