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ARTICLE · 14 JANUARY 2019

SRB's 2018 MREL Policy: Setting The Standard For The First Wave Of Resolution Plans

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QuickTake: What next for Minimum Requirement for Own Funds and Eligible Liabilities (MREL)?

GermanyFinance and Banking

QuickTake: What next for Minimum Requirement for Own Funds and Eligible Liabilities (MREL)?

European credit institutions i.e. banks have been required to comply with the EU's MREL requirement, which was introduced in 2014 and substantially updated in 2017. MREL consists of own funds and part of the institutions' liabilities. If an institution fails and goes into a regulatory led resolution process, the MREL acts as a buffer to absorb losses and provide new regulatory capital to the institution as well as being capable of becoming subordinated (despite some on-going disagreement on how/when that is possible). The recapitalization also assists with providing stability for the firm to perform its "critical functions" and fulfil obligations with creating (further) additional systemic risk.

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