Minimum requirement for own funds and eligible liabilities (MREL) – initial assessment for Austrian banks and selected subsidiaries in the EU

Johannes Langthaler, Valentina Metz (), Patrick Pechmann, Konrad Richter, Bernhard Rottensteiner, Daniel Unterkofler and Philipp Weiss
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Valentina Metz: Oesterreichische Nationalbank

Financial Stability Report, 2016, issue 31, 82-95

Abstract: The minimum requirement for own funds and eligible liabilities (MREL) is a key element in bank resolution planning. It is particularly important for the effective application of the bail-in resolution tool which was introduced into EU law, together with MREL, with the Bank Recovery and Resolution Directive (BRRD) in 2014 and enacted in Austrian law in 2015. The purpose of MREL is to ensure that banks have adequate loss absorption and recapitalization resources in case of resolution. Given the narrow time schedule for implementing this new requirement, it is important to gain an understanding of the current situation for Austrian credit institutions and their EU subsidiaries in Central, Eastern and Southeastern Europe (CESEE). Therefore, the Austrian national resolution authority, i.e. the Financial Market Authority (FMA), together with the Oesterreichische Nationalbank conducted a survey among a selected sample of Austrian banks with the aim of assessing their MREL-eligible resources. The surveyed institutions were asked to provide data on the composition of their own funds and liabilities as per year-end 2014. The survey was designed to elicit answers to the most important questions arising from the implementation of MREL: How high is the current amount of MREL-eligible resources in the Austrian banking sector? How high is the amount that is available for bail-in in case of resolution? What is the current composition of MREL-eligible resources? Are there differences between different types of institutions? Are there enough MREL-eligible resources or are there any shortfalls? The supervisory and in particular the resolution authorities will need this information when setting MREL levels in order to assess impacts on major banking groups, to increase market transparency and to contribute to a stable regulatory environment in general.

Keywords: minimum requirement for own funds and eligible liabilities (MREL); total loss-absorbing capacity (TLAC); BRRD; resolution; bail-in; Austrian banks; CESEE (search for similar items in EconPapers)
JEL-codes: G21 G28 G31 G32 G33 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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