European Parliament adopts changes to EU bank resolution rules including recalibrated MREL regime
On 16 April, the European Parliament adopted important amendments to the Bank Recovery and Resolution Directive, including a new framework for minimum requirements for own funds and eligible liabilities (MREL) that will bring EU rules into conformity with the international TLAC standard. Adoption by the Council should follow imminently. Assuming publication in the Official Journal by June, Member States will have until December 2020 to implement the changes. Within the euro area, analogous revisions to the Single Resolution Mechanism Regulation will apply on the same timetable. New MREL rules will be phased in by 2024.
The new MREL regime will introduce fixed minimum levels of MREL and minimum subordination requirements for EU G-SIIs (global systemically important institutions), as well as for some other significant EU firms. Other amendments to the BRRD will change the way moratoria may be deployed in future resolutions (though not their duration) and also modify compliance requirements relating to the inclusion of ‘contractual recognition of bail-in’ wording in contracts governed by non-EU law.