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MREL final standards by resolution authority
EBA guidance to National Resolution Authorities – how will guidance affect your reporting to the NRA?
The European Banking Authority (EBA) published today its final draft implementing technical standards (ITS) specifying templates and procedures resolution authorities should follow when informing the EBA of the minimum requirement for own funds and eligible liabilities (MREL) that have been set for institutions under their jurisdiction. These standards will enable the EBA to monitor the consistency of MREL implementation across the EU.
Resolution Authorities are required to report to the EBA the MREL that has been set for each institution in their respective jurisdiction according to common procedures and using common templates.
Under the common templates, resolution will report the overall amount of MREL required from an institution, as well as each of the components of the MREL decision as laid down in the Regulatory Technical Standard (RTS) on MREL . Where resolution Authorities depart, in compliance with the RTS on MREL, from a default component of the MREL methodology (for example to take into account liabilities which are reasonably likely to be fully or partially excluded from bail-in), they are required to provide an explanation on the adjustments made. This will facilitate the EBA in monitoring the consistency in the application of the MREL framework and help assess any divergences in the levels of MREL set for comparable institutions across Member States.
The ITS also provide for simplified reporting for certain categories of institutions for which liquidation, rather than resolution, will be the preferred strategy. In those cases, the MREL will only be made of a loss absorption amount.
These ITS only cover the reporting of MREL requirements from Resolution Authorities to the EBA. Reporting by institutions to Resolution or Competent Authorities is outside of the scope of these ITS.
How Deloitte can help?
Deloitte has been assisting various NRAs in EU to adjust their reporting requirements to EBA and communicate NRA reporting requirements to the lenders including reviewing and assessing resolution plans on behalf of the Authority.
Please feel free to request a free workshop with our team to explore how the new RTS may be affecting not only reporting but also capital management for resolution purposes