4.3.4.5 MREL

Banks have to meet a minimum requirement for own funds and eligible liabilities (MREL).1 The MREL ensures that banks cannot structure their lia bilities in a manner that impedes the effectiveness of the bail-in.2 In other words: the MREL ensures that there are sufficient liabilities that can be bailed in. Another objective of the MREL is to increase the predictability of the bail-in operation for the bank’s investors. MREL is thus “a necessary corollary to make bail-in work”.3

The determination of the MREL is made in parallel with the development and maintenance of the resolution plans.4 The SRB shall address its determination to the national resolution authorities. The national resolution authorities shall implement the instructions of the SRB in accordance with Article 29. The SRB shall require that the national resolution authorities verify and ensure that banks maintain the MREL.5

On 9 November 2015, the FSB introduced the Total Loss-absorbing Capacity (TLAC) Term Sheet. This TLAC standard is a standard for G-SIB’s.6 The MREL was similar, but not identical to the TLAC standard. On 23 November 2016, the Commission adopted a proposal (for a regulation) to integrate the TLAC standard in the MREL.