EBA expresses dissent over EU Commission proposed amendments to the MREL technical standards

The European Banking Authority (EBA) issued today an Opinion to the European Commission expressing its dissent over some of its proposed amendments to the EBA final draft Regulatory Technical Standard (RTS) on the criteria for setting the minimum requirement for own funds and eligible liabilities (MREL) and encouraging the prompt adoption of the standard.

On 3 July 2015, the EBA submitted its final draft RTS to the European Commission, which included references to the conditions for accessing resolution, specific provisions for setting MREL for systemic institutions, and an option to set a limited compliance transition period.

On 17 December 2015, the European Commission proposed a number of amendments to the RTS submitted by the EBA. In particular, it proposed to amend the reference to the burden-sharing requirement by shareholders and creditors of institutions of significant importance. Although the EBA agrees with the Commission's argument that the RTS cannot set a harmonised level of MREL, it dissents from some of these amendments as it believes legal clarity and certainty is needed when setting MREL for a systemic institution which may need to access resolution funds.

In addition, the Commission proposed to remove several specific provisions relating to the criteria for setting MREL for systemic institutions, to the consultation between competent and resolution authorities on specific matters and the upper limit on the transitional compliance period. The EBA dissents from these amendments as it believes they would reduce the effectiveness of the RTS in promoting smooth cooperation and convergence when setting MRELs. 

With this Opinion the EBA also calls on the Commission to promptly adopt these important RTS.

Background and legal basis

The final draft Regulatory Technical Standards (RTS) on criteria for setting MREL have been developed according to Article 45(2) of the Bank Recovery and Resolution Directive (BRRD) and were submitted to the Commission for endorsement on 3 July 2015.

On 18 December 2015, the Commission informed the EBA that in accordance with the procedure set out in the fifth subparagraphs of Article 15(1) of Regulation (EU) No 1093/2010, it intended to amend the final draft RTS submitted by the EBA.

The EBA's competence to deliver an opinion is based on the fifth subparagraph of Article 15(1) of Regulation (EU) No 1093/2010. In accordance with Article 14(5) of the Rules of Procedure of the Board of Supervisors, the Board of Supervisors adopted this Opinion.