On 28 July 2021, the Single Resolution Board (SRB) published information on its approach to prior permissions for eligible liabilities, in line with upcoming regulatory changes.
Banks need an authorisation under Articles 77 and 78a of the Capital Requirements Regulation (CRR) to redeem eligible liabilities, as of 27 June 2019. Article 78a(3) of the CRR provides for the development of regulatory technical standards (RTS) to specify certain elements of that authorisation. The European Commission will finalise the draft RTS by adopting them in the form of a Delegated Regulation but for procedural reasons, this will most likely not be achieved by 1 January 2022 which is the deadline for institutions to comply with the intermediate MREL targets set under the Regulation for the single resolution mechanism.
In light of the delay the SRB states that it will be amending its provisional policy in line with Section 2 – Subsection 2 – “Permission for reducing eligible liabilities instruments” of the draft RTS for all permissions effective as of 1 January 2022. This means that applications for permission for redemptions of eligible liabilities should be compliant with the requirements in the RTS. Exceptionally, banks can file their applications until the end of September 2021, to allow them to familiarise themselves with the details. Banks’ applications for authorisations from 1 January 2022 should be based on the list of information requirements as referred to in Articles 32(d) and (e) of the draft RTS. An additional communication from the SRB will be published in early September. Banks are encouraged to contact SRB in case of any additional questions.