- Question ID
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2022_6589
- Legal act
- Directive 2014/59/EU (BRRD)
- Topic
- MREL
- Article
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45c
- Paragraph
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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
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86 (1) last subpara.
- Name of institution / submitter
-
National Bank of Romania
- Country of incorporation / residence
-
Romania
- Type of submitter
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Resolution authority
- Subject matter
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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
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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
-
This question has been rejected because the question is not sufficiently clear, or has not sufficiently identified a provision of a legal framework covered by this tool that creates uncertainty and for which an explanation is merited in terms or practical implementation or application. The Single Rule Book Q&A tool has been established to provide explanations and non-binding interpretations on questions relating to the practical application or implementation of the provisions of legislative acts referred to in Article 1(2) of the EBA’s founding Regulation, as well as associated delegated and implementing acts, and guidelines and recommendations, adopted under these legislative acts. For further information on the purpose of this tool and on how to submit questions, please see 'Additional background and guidance for asking questions'
- Status
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Rejected question