Regulatory Alerts2021-02-23
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Amendments introduced by the Bank Recovery and Resolution Directive II
Directive (EU) 2019/879 (BRRD2) amends Directive 2014/59/EU to harmonize triggers for normal insolvency proceedings and align Minimum Requirement for own funds and Eligible Liabilities (MREL) with Total Loss-Absorbing Capacity (TLAC) standards. The amendments require MREL to be expressed as a percentage of total risk exposure and align eligibility criteria for bail-inable liabilities with Regulation (EU) No 575/2013, while allowing National Resolution Authorities to require subordinated liabilities to meet MREL. New Article 44a obliges sellers of subordinated eligible liabilities to apply specific rules to retail clients purchasing such instruments after 28 December 2020. Additionally, National Resolution Authorities are granted a suspension power for certain contractual obligations, including eligible deposits, for a maximum duration of two working days to prevent further deterioration of financial conditions.
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