EBA Sees Progress in MREL Shortfall Reduction by Largest Institutions while Smaller Institutions are Lagging Behind
On 22 April 2022 the European Banking Authority (EBA) published its annual Report on minimum requirements for own funds and eligible liabilities (MREL).
The purpose of the report is to display the improvement in the MREL shortfalls as of December 2020 mostly driven by the largest institutions.
The report outlines:
- A decrease of January 2024 MREL target shortfall from EUR 115bn as of December 2019 to EUR 67,6bn for 110 resolution groups.
- A shortfall of EUR 30bn for other banks and other systemically important institutions (OSIIs)
- Little progress for small banks as their MREL decisions were issued in 2018 or 2019.
- Intermediate target as of January 2022 resulting in limited shortfall of EUR 13,3bn among 38 out of 260 other banks and O-SIIs.
Regarding the Internal MREL as loss absorbing capacity streamed from parent entity to subsidiary, EBA reports the following:
- 128 decisions received by EBA from authorities in the first year of BRRD II implementation.
- 73% of Risk-Weighted Assets expected to receive internal MREL decisions in steady state.
- EUR 36bn of shortfall for 62 out of 128 non-resolution groups in the sample.
Published on 13.07.2022
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