The European Banking Authority (EBA) has published its updated MREL (minimum requirements for own funds and eligible liabilities) monitoring report. The report’s findings show that the MREL shortfalls of EU credit institutions continue their downward path, which is mainly explained by the favourable trend in the economic situation in which the larger institutions find themselves. The financial information used in the monitoring report is based on the situation as at the end of 2020. The report also covers the Finnish credit institutions with an MREL shortfall.
Here are some of the findings in the report:
- An MREL shortfall was identified in 110 credit institution groups in a sample of 260 such institutions in all. The combined MREL shortfall was 68 billion euros (against their end-state MREL targets set for the start of 2024), which is far less than the 115 billion euros identified a year ago. This positive trend is mainly the result of the decrease in MREL shortfalls among the biggest institutions.
- An internal MREL shortfall was identified in 62 credit institutions in a sample of 128. The combined internal MREL shortfall was 36 billion euros (compared to the end-state MREL targets set the start of 2024).
- The average for TREA- (LRE-) based MREL shortfalls varies between 21.7% and 23.1% (6.7% and 7.3%), depending on the credit institution classification (G-SII, O-SII and other banks). Furthermore, the average for the combined buffer requirement (CBR) on top of the TREA-based MREL shortfall varies between 3.0% and 3.6%, depending on the classification of institution.
Link to the EBA’s report: EBA sees progress in MREL shortfall reduction by largest institutions while smaller institutions are lagging behind
More information: Analyst Tero Niemelä (firstname.surname(at)rvv.fi)
