The EU Risk Reduction Package: The Countdown for Restructuring the MREL Base Has Just Begun
The pending EU risk reduction package is highly relevant for the whole EU banking sector. It addresses the capital provisioning required by banks to facilitate potential resolution measures by resolution authorities if a bank is failing or likely to fail. The reform package spells out which instruments banks may use to fulfill these capital provisioning requirements and how to compute their amount in different corporate, group or consolidation structures. Further aspects are reporting and disclosure requirements, the competent authorities’ powers in case of breaches, as well as consumer protection, requiring banks to ensure that consumers are not offered instruments that will be bailed-in or written-down first in the issuing bank’s resolution.
Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our “Contact Us” form, which can be found on our website at www.jonesday.com. The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.