Source: European Parliament
Article 45m(1) of the second Bank Recovery and Resolution Directive specifies that the deadline for credit institutions and investment firms to comply with the relevant minimum requirements for own funds and eligible liabilities (MREL) shall be 1 January 2024 (1) . This provision was the final political agreement between the Council and Parliament in a concerted effort to cater for the need of banks to have sufficient loss absorbing capacity in cases of bank resolution, while ensuring that the European banking system has enough time to comply with these requirements without undue risk to its ability to finance the economy.
However, it has come to our attention that the Single Resolution Board (SRB) questioned the Commission under the European Banking Authority (EBA) Q&A procedure on this issue, raising doubts over the interpretation of this provision.
The Commission has yet to publish an answer.
1 What is the Commission’s interpretation of Article 45m(1), specifically on the possibility of resolution authorities setting transition periods with an end date earlier than 1 January 2024?
2 What is the status of the question put forward by the SRB on the interpretation of Article 45m(1) under the EBA’s Q&A procedure?
3 Why has the Commission not yet provided an answer that will bring much-needed clarity on this issue?