Interplay between subordination and calibration for MREL

Shall subordination and calibration requirements set out in Art. 45b and 45c BRRD be met at all times, independently from each other?

The subordination requirement set out in Art. 45b BRRD introduces specified levels of subordination for various categories of banks. The calibration requirement set out in Art. 45c BRRD also specifies how MREL targets should be calibrated, following different approaches and formulas. Recital 10 specifies that resolution authorities should be able to require that a part of the MREL equal to the level of loss absorption and recapitalisation referred to in the relevant articles is met with subordinated instruments. This reference is also introduced in Art. 45b(4) BRRD stating that resolution authorities shall ensure that a part of the requirement equal to 8 % of the total liabilities including own funds shall be met by certain banks with subordinated instruments. The interaction between these provisions should be clarified, to define whether subordination is a component of the calibration requirement, or shall be met independently. The question is also valid for the relevant SRMR provisions.