Single Resolution Board publishes MREL dashboard Q2.2022

Today, the Single Resolution Board (SRB) has published its minimum requirement for own funds and eligible liabilities (MREL) dashboard for Q2.2022. The expanded dashboard now provides more transparency by category of bank and resolution strategy.

“Our latest dashboard shows that, up to the second quarter of the year, banks have kept the pace when it comes to MREL build-up. Market funding conditions deteriorated in 2022 in light of inflationary pressure and the invasion of Ukraine. In this market environment, sound funding plans are of utmost importance to ensure that all banks are resolvable,” said SRB Chair Elke König.

Key findings:

• The average MREL final target including the combined buffer requirement (CBR) for resolution entities, to be respected by 1 January 2024, was equal to 26.4% of the Total Risk Exposure Amount (TREA), remaining stable compared to Q1.2022.

• The average MREL shortfall with respect to the final 2024 targets, when considering the CBR, declined to  EUR 32.2 bn (or 0.4% TREA), i.e. by EUR 4.7 bn with respect to the previous quarter and by EUR 7 bn year-on-year.

• For non-resolution entities, the average MREL shortfall (including the CBR) continued its decreasing trend reaching the value of EUR 17.1 bn (or 0.8% TREA).

• Almost all banks met the MREL intermediate 2022 targets (including the CBR). The very few shortfall cases are being closely monitored.

• The maturity profile of the MREL instruments shows that 37% of the stock was composed by instruments with residual maturities between two and 10 years, while the share of short-term MREL debt (maturing between one and two years) was relatively low, accounting for around 7% of the total.

• SRB banks managed to issue MREL eligible instruments amounting to EUR 67.3 bn in the second quarter of the year, in reduction by around 20% compared to Q1.2022, but remaining broadly stable with respect to the same period of 2021.

• Deteriorated funding market conditions stemming from geopolitical tensions and high inflation resulted in higher spreads in Q3.2022. At the end of September, indexes on subordinated and senior financial debt registered the highest level since the beginning of the year, but they decreased throughout the month of October.