European Banking Authority Publishes Final Report On MREL Framework

On December 14, 2016, the EBA published its final Report on the design and implementation of the minimum requirement for own funds and eligible liabilities framework. MREL is the EU equivalent of the US Total Loss Absorbing Capacity (known as TLAC) rule. The Report is addressed to the European Commission following publication of its proposed banking reform package on November 23, 2016 which included proposals to amend the Bank Recovery & Resolution Directive and the CRR to integrate the TLAC Standard into the EU's MREL framework. The EBA does not currently consider that any changes to the key principles underlining the RTS (adopted by the Commission in May 2016) on the criteria for setting MREL are needed. The Report does, however, identify changes with a view to improving the technical soundness of the MREL framework and implementing the TLAC Standard as a key component of that framework. The EBA has made recommendations on twelve topics.