Publication date: 12 June 2016
As European decision makers are discussing the way forward on TLAC implementation and the expected MREL review in Europe, the European Banking Federation would like to provide the following key principles and comments to facilitate the evolving thinking on TLAC and MREL implementation in Europe:
The implementation of loss absorbency and recapitalisation requirements in the EU should:
- ensure legal certainty and provide all market participants with a stable, predictable and transparent methodology for setting loss absorbing capacity requirements sufficient to ensure the continuity of critical functions provided by banks, without recourse to public solvency support.
- be consistent with the globally agreed TLAC term sheet and fully avail itself of the therein embedded different options for debt subordination that best meet European specificities and business and funding models. Any departure from the TLAC Term Sheet needs to be tested in an impact assessment to ensure the benefits outweigh the costs and that the framework is consistent with the Commission’s jobs and growth agenda.
- be consistent with the resolution strategy of individual banks and striking the right balance between avoiding market fragmentation and ensuring a level playing field.
- ensure conceptual and technical consistency with the existing legal framework, notably the CRR and BRRD, and retain the legal framework as simple as possible