Public funding of failing banks in the European Union
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Public funding of failing banks in the European Union (LBF vol. 19) 2020/2.5.2.0:2.5.2.0 Introductie
Public funding of failing banks in the European Union (LBF vol. 19) 2020/2.5.2.0
2.5.2.0 Introductie
Documentgegevens:
mr. M. Louisse-Read, datum 01-06-2020
- Datum
01-06-2020
- Auteur
mr. M. Louisse-Read
- JCDI
JCDI:ADS213856:1
- Vakgebied(en)
Financieel recht / Europees financieel recht
Staatssteun (V)
Deze functie is alleen te gebruiken als je bent ingelogd.
The MREL is calculated by the resolution authorities as the amount of own funds and eligible liabilities of the bank expressed as a percentage of the total liabilities and own funds of the bank.1 The EBA has assessed the average composition of MREL-eligible instruments in its report dated 14 December 2016.2 The outcome of the assessment is shown in the next figure.
Figure 5: Average composition of MREL-eligible instruments
Source: EBA Final MREL Report 2016, p. 38.
In this figure, the MREL ratio is set as a percentage of total liabilities and own funds and distinguishes between global systemically important banks (G-SIBs), O-SIIs and other banks (non-G-SIBs and non-O-SIIs).3 The ECB explains in its report that capital instruments constitute the highest proportion of EU banks’ MREL-eligible stack —on average, 43% of total MREL. On average, other banks (non-G-SIBs and non-O-SIIs) have the highest proportion of subordinated debt, at approximately 5% of total liabilities and own funds. O-SIIs have a lower proportion of subordinated debt than other banks and a higher proportion of MREL-eligible deposits than G-SIBs.4
The terms ‘own funds’ and ‘eligible liabilities’ are further discussed in the following sections.