Brussels, 23/05/2016 (Agence Europe) - On Monday 23 May, the European Commission adopted an implementing regulation detailing the criteria to be used by the banking supervisors to set the minimum capital requirements ('MREL') in the event of the restructuring of a major banking group.
Drawing inspiration from an opinion of the European Banking Authority (EBA), the draft regulation implements the 'BRRD' Directive (2014/59) on the national banking restructuring and resolution regimes. This directive, which has been applicable since January 2015, requires the banking resolution authorities to draft resolution plans providing for 'MREL' requirements for each bank under its remit. However, it does not harmonise the minimum level of bail-in-able instruments at European level.
The draft regulatory standard takes up the list of criteria - such as the size of the bank, its commercial and financing models, the risk profile - contained in the 'BRRD' Directive and allows the resolution authorities “discretion on the minimum level on MREL and, to a lesser degree, on the composition of MREL that is appropriate for each bank”, the European Commission states in a press release. For instance, it lays down the conditions under which an asset can be excluded from the bail-in-able instruments and a national deposit guarantee scheme may contribute to bringing down the minimum capital requirements.
“It is important that banks hold enough regulatory capital and high-quality liabilities to absorb potential losses in case they have to be resolved. Today's implementing rules help ensure that”, said the Commissioner for Financial Services.
The draft regulation has been put to the Council of the EU and the European Parliament, which each have three months to approve or reject the text as a whole. (Original version in French by Mathieu Bion)