MREL determination in case of an entity that is subject to simplified requirements in respect of resolution plan

The question considers a case of an institution subject to the scope of application of simplified obligations on recovery and resolution planning (SO) (in accordance to Article 4 of Directive 2014/59/EU (BRRD)) resulting in a frequency for updating the recovery and resolution plans lower than the annual requirement provided for in Articles 5(2), 7(5), 10(6) and 13(3) BRRD. In line with Article 10(7) letters o) and p) BRRD, the minimum requirement for own funds and eligible liabilities (MREL) is a component of the resolution plan, and as such needs to be updated with the same frequency as the respective resolution plan. The application of SO resulting in a lower frequency of the update of the resolution plan should also affect the frequency of the regular MREL determination which will follow that of the update of the resolution plan. However, Article 45c(9) BRRD requires the resolution authority to review any decision to impose MREL ‘without undue delay’ in order to reflect any changes in the level of the prudential requirement referred to in Article 104a of Directive 2013/36/EU. While the MREL determination should be updated to reflect the change in the additional own funds requirement, this per se would not entail a change in the lower frequency of the update of the resolution plan (as per the SO agreed). Article 45h(8) BRRD requires that MREL decisions are taken in parallel with the development and maintenance of resolution plans, but does not preclude, in these cases, the possibility of updating the MREL decision, without the need to simultaneously update all the other remaining elements of the resolution plan.