EBA · 2022_6589 Rejected question

MREL determination and resolution plan updating in a group where parent entity is on simplified obligations while the subsidiary does not

Regulation
Directive 2014/59/EU (BRRD)
Article
45c, para. 9
Topic
MREL
Submitted by
Resolution authority
Submitted
2022-09-23

Question

In case of a group where the parent  entity applies simplified obligations (according to which the resolution plan is updated every 2 years) while the subsidiary does not apply simplified obligations, how is the joint decision (on the resolution plan and also on MREL) taken?

Background

According to Article 4 BRRD, resolution authorities can establish simplified requirements in respect of the resolution plans of credit institutions. The simplified requirements are those indicated in letters a)-d) of Article 4, including the frequency of updating the resolution plans.    The BRRD provisions are supplemented by Commission Delegated Regulation (EU) 2019/348 which regulates in Article 5 the situation of institutions belonging to groups. In line with Article 45.1 BRRD, institutions should permanently meet the MREL and this requirement should be reported to competent authorities and resolution authorities in line with Article 45i BRRD and Implementing Regulation (EU) 763/2021 on a quarterly basis. At the same time, the MREL set by the resolution authority is reported yearly to EBA in line with Article 45j BRRD and the provisions of the Implementing Regulation (EU) 622/2021. Also, in line with Article 10.7 letters o) and p) BRRD, MREL is a component of the resolution plan which is updated at least annually. According to art. 45c.9 the decision of the resolution authority to impose MREL requirement shall be reviewed without undue delay to reflect any changes in the level of the requirement referred to in Article 104a of Directive 2013/36/UE. And finally, in line with Article 86.1 last subpara. of the Commission Delegated Regulation 1075/2016, the group-level resolution authority and the resolution authorities of subsidiaries shall consider that the four-month period for the reach of the joint decision on minimum requirements for own funds and eligible liabilities starts simultaneously with the four-month period for the reach of the joint decision on group resolution plan and resolvability assessment.   Having regard to the before mentioned legal provisions, it is not clear how the joint decision on MREL and group resolution plan is taken among resolution authorities for the case where the resolution plan is updated every 2 years due to simplified obligation regime applying to the parent entity while its subsidiaries are not subject to such simplified obligations.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2022_6589

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

Similar Q&As

More Q&As on this topic

📋 Track EU financial regulation continuously

Forseti monitors EU financial regulation and delivers personalised alerts anchored to verified official sources.

14-day free trial. No credit card required.