Question ID
2022_6589
Legal act
Directive 2014/59/EU (BRRD)
Topic
MREL
Article
45c
Paragraph
9
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Delegated Regulation (EU) 2016/1075 - DR on the content of recovery and resolution plans, financial support, independent valuers, contractual recognition of write down and conversion powers, notices of suspension and resolution colleges
Article/Paragraph
86 (1) last subpara.
Name of institution / submitter
National Bank of Romania
Country of incorporation / residence
Romania
Type of submitter
Resolution authority
Subject matter
MREL determination and resolution plan updating in a group where parent entity is on simplified obligations while the subsidiary does not
Question

In case of a group where the parent  entity applies simplified obligations (according to which the resolution plan is updated every 2 years) while the subsidiary does not apply simplified obligations, how is the joint decision (on the resolution plan and also on MREL) taken?

Background on the question

According to Article 4 BRRD, resolution authorities can establish simplified requirements in respect of the resolution plans of credit institutions. The simplified requirements are those indicated in letters a)-d) of Article 4, including the frequency of updating the resolution plans.   

The BRRD provisions are supplemented by Commission Delegated Regulation (EU) 2019/348 which regulates in Article 5 the situation of institutions belonging to groups.

In line with Article 45.1 BRRD, institutions should permanently meet the MREL and this requirement should be reported to competent authorities and resolution authorities in line with Article 45i BRRD and Implementing Regulation (EU) 763/2021 on a quarterly basis. At the same time, the MREL set by the resolution authority is reported yearly to EBA in line with Article 45j BRRD and the provisions of the Implementing Regulation (EU) 622/2021.

Also, in line with Article 10.7 letters o) and p) BRRD, MREL is a component of the resolution plan which is updated at least annually.

According to art. 45c.9 the decision of the resolution authority to impose MREL requirement shall be reviewed without undue delay to reflect any changes in the level of the requirement referred to in Article 104a of Directive 2013/36/UE.

And finally, in line with Article 86.1 last subpara. of the Commission Delegated Regulation 1075/2016, the group-level resolution authority and the resolution authorities of subsidiaries shall consider that the four-month period for the reach of the joint decision on minimum requirements for own funds and eligible liabilities starts simultaneously with the four-month period for the reach of the joint decision on group resolution plan and resolvability assessment.  

Having regard to the before mentioned legal provisions, it is not clear how the joint decision on MREL and group resolution plan is taken among resolution authorities for the case where the resolution plan is updated every 2 years due to simplified obligation regime applying to the parent entity while its subsidiaries are not subject to such simplified obligations.

Submission date
Rejected publishing date
Rationale for rejection

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Status
Rejected question