Minimum Requirement for own funds and Eligible Liabilities (MREL)
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. MREL represents one of the key tools in enhancing banks’ resolvability.
MREL determination in the Banking Union
In 2017, the SRB developed its MREL policy and adopted its first binding decisions for major banking groups.
Considering the need to address the specificities of the most complex groups with more details, the SRB has split the 2018 resolution planning cycle into two waves.
The first started in January 2018 to allow for the banks that did not have binding targets – for instance those without presence outside the Banking Union – to be addressed first based on a MREL policy largely following the 2017 approach and published on 20 November 2018.
For the second wave of resolution plans, covering the most complex banks, MREL setting will be based on an enhanced MREL policy published on 16 January 2019. This second part of the 2018 MREL policy introduces a series of new features to strengthen the MREL approach and banks’ resolvability within the Banking Union and prepare banks for future regulatory changes in the context of the “Banking Package”.
The SRB has published an update to its policy on minimum requirement for own funds and eligible liabilities (MREL) in light of the publication of the Banking Package in the Official Journal of the EU on 7 June 2019.
- 2018 SRB Policy for the first wave of resolution plans
- 2018 SRB Policy for the second wave of resolution plans
- CRR Addendum to the 2018 SRB Policy for the second wave of resolution plans
- 7th Industry Dialogue Presentation on MREL
- SRB 2016 MREL policy
- Data collection for resolution planning and the determination of the Minimum Requirement for own funds and Eligible Liabilities (MREL)