Keynote speech by SRB Chair Dominique Laboureix at the 10th MREL Workshop – "MREL: Ten workshops later, what have we learned?"

[Check against delivery]

Ladies and gentlemen, good afternoon,

It is a pleasure to be back in Vienna.

This year marks the tenth anniversary of the MREL workshop. Let me congratulate all organisations, European and international, private and public, behind the Vienna Initiative on reaching this milestone.

These workshops are very important to us.

They provide a valuable platform to exchange experiences, learn from each other, and align banking sector practices in Central, Eastern and Southeastern Europe (CESEE) with those in the Banking Union.

This alignment, along with the development of bank resolution frameworks, helps to promote the resilience and competitiveness of the CESEE economies. For candidate countries to the EU, it also lays the foundations for a wider Union, and for those joining the Banking Union, an enlarged Single Supervisory and Resolution Mechanism (SSM and SRM) at the service of more EU citizens.

This is why the SRB regularly participates in these workshops to share its experience in building an effective bank resolution framework.

Today, I would like to share some lessons from that journey.

I will first explain why MREL matters and why the development of capital markets is a fundamental step towards building an effective resolution framework in the CESEE region. I will then turn to a second and equally important point: MREL on its own is not enough. While it provides resources, a successful resolution ultimately depends on banks and authorities developing the capabilities to manage a crisis effectively.

So, why does MREL matter? I will start with its role as a resolution tool.

I. MREL: the foundation for an effective crisis framework and a resilient banking sector in the Banking Union

Let’s begin by travelling back in time.

In the wake of the global financial crisis, governments faced a fundamental challenge: how to end taxpayer-funded bailouts, while minimising moral hazard and ensuring that others than taxpayers bears the cost of bank failure?

The answer came from the Financial Stability Board, which introduced the Total Loss-Absorbing Capacity (TLAC) standard for global systemically important banks.

The principle was simple: shareholders and certain creditors would absorb losses first. 

Through a “bail-in”, resolution authorities write down shares, liabilities to absorb losses and then, convert certain liabilities into equity to recapitalise the bank. This helps preserve the bank’s critical functions, protects financial stability and avoids taxpayers from footing the bill.

In the EU, we implemented TLAC through the minimum requirements for own funds and eligible liabilities or MREL.

But we made significant changes: we extended MREL to all the banks earmarked for resolution, tailored requirements to each bank's resolution strategy and distinguished between the portions to be met with subordinated and senior instruments.

We also introduced a safeguard to access Single Resolution Fund. To receive the Fund’s support, shareholders and creditors must first absorb losses equivalent to 8% of total liabilities and own funds or TLOF. We also set a subordinated MREL target of 8% TLOF to ensure sufficient loss-absorbing capacity in subordinated instruments. 

The credibility of the EU resolution framework therefore hinges on banks having the right amount of MREL at the right location and with the right quality. Without sufficient loss absorbing capacity, the execution of bail-in or any other transfer strategy could fail, taking us back to square one.

This is why so much emphasis was placed on building up MREL in the beginning.

The good news is that banks, with a few exceptions who received additional transition periods, met their MREL targets by the January 2024 deadline set by the BRRD.

But the journey was not without obstacles. You do not just build more than EUR 2.6 trillion of loss absorption capacity overnight!

For this, I would like to look at MREL from another perspective, as a market instrument.

II. Developing MREL markets: a key step towards stronger crisis management in the CESEE region

The EBRD often speaks to “transitions”. I like this narrative because it captures a much deeper economic shift that goes beyond regulatory reform.

The development of capital markets for MREL instruments in the EU was not simply a compliance exercise. It entailed a shift in mindset for banks, investors and authorities.

Markets needed time to learn how to price the risk of bail-in. But gradually, issuances expanded from private placements to public offerings and volumes grew significantly.

Today, the high volume of gross MREL issuances reflects the depth of the market.

Over the past five years alone, SRB banks have issued close to EUR 300 billion in MREL-eligible instruments annually¹, demonstrating the market’s capacity to support resolvability at scale.

But I will even go one step further.

Resolution is no longer an abstract concept that applies to others. MREL markets have reached a critical mass, and their liquidity shows that investors understand these debt instruments. MREL has become such an integral part of markets that rating agencies now lower banks’ risk profiles when they meet their MREL targets and are resolvable.

This is extremely positive.

It means that MREL has not only strengthened banks’ capacity to absorb losses and support recapitalisation in resolution but has also been recognised by markets as a signal of the banking sector’s resilience and competitiveness.

Now let me come to the CESEE region.

The first message I wish to convey today is that developing capital markets for MREL is a necessary step towards establishing crisis management frameworks based on Basel and European standards.

These MREL markets strengthen banks’ resilience at both individual- and system-wide levels, attract more investors over time and build market confidence.

The concerns voiced by banks, investors and regulators at this workshop resonate with me because some EU banking systems faced similar challenges in the early years of the Banking Union. I still recall discussions from my first mandate as a Board Member about the difficulties some European banks initially faced.

It is no coincidence that the EBRD signed its first MREL-eligible investment in Greece in December 2016².

SRB banks were confronted with shallow markets and few institutional investors willing to invest in bail-inable instruments. Smaller banks often paid a disproportionate price, as investors demanded a higher premium making it more difficult for them to tap MREL markets.

Banks in the CESEE region face additional challenges as they are often subsidiaries of Western banking groups under a multiple point of entry (MPE) strategy. This means that failures are managed at the level of local subsidiaries rather than the parent, which requires them to issue external debt in their local markets, adding a potential burden.

Combined, these obstacles led many banks in the region to place their debt directly with retail customers, whose savings could be wiped out in a crisis. This is clearly sub-optimal and goes against the core philosophy of the BRRD.

Ten MREL workshops later, I am pleased to see that MREL markets are growing.

The EBRD has played an instrumental role in driving this “transition” in both EU and non-EU countries across the CESEE region. Without making losses by the way – as the EU banking system has increased its overall resilience in the recent years.

These investments are not only a tool to promote regulatory compliance.

For many non-EU countries harmonising their laws with the BRRD, these are decisive investments that bring them closer to EU membership. For example, in the Western Balkans, the EBRD’s support has been instrumental in helping domestic banks issue local-currency bonds to meet their MREL targets as part of their pre-accession efforts.

III.  Making MREL work: the importance of crisis preparedness capabilities

My second message is that MREL is only the first step. While it provides resources, a successful resolution depends on a much broader set of capabilities that banks and authorities must demonstrate in a crisis.

For banks, this means building up their resolvability.

To guide banks in their resolution planning, we published our expectations to banks in 2020, which cover seven dimensions essential to executing a successful resolution.

Naturally, these include expectations on loss absorption and recapitalisation capacity, but also on banks’ operational continuity, valuation and communication in resolution.

Let me illustrate how our expectations prepare banks to execute bail-in for example.

Timely access to data is essential for bail-in. This is why the SRB requires banks to provide their liability data using our Minimum Bail-in Data Template, which ensures a harmonised structure for all banks across the Banking Union.

But the right data is only one part of the equation. Banks must also be operationally ready to execute a bail-in, with clear playbooks defining responsibilities, identifying the instruments in scope and setting out how to coordinate with external stakeholders, including central securities depositories.

Banks under the SRB’s remit are very familiar with these expectations because they have been developing these capabilities since 2020.

With our strategic review, the SRM Vision 2028 launched in 2024, we have shifted our focus from the build-up of these capabilities to their operationalisation. In practice, this means that banks now test their arrangements to ensure they work in crisis.

But banks are not the only ones who need to be crisis ready. Authorities as well must be ready to act at all times.

This means developing resolution plans but also strengthening our own preparedness.

To achieve this, we have drafted more than 150 resolution plans for all SRM banks. In parallel, in cooperation with the 21 national resolution authorities which participate in the SRM, we have also developed a comprehensive set of crisis templates, tools and operational procedures.

Valuation is a perfect example of an area where banks and authorities must be equally prepared. Without robust bank data, there is little the SRB can do. Equally, even the most sophisticated valuation tool cannot compensate for flawed data.

Reliable valuations are therefore essential to any resolution. This is why, in 2025, the SRB issued its expectations on banks’ valuation capabilities, while also developing its own valuation tool to support valuations in a crisis. Alongside these efforts, we invest in staff training to ensure we have the expertise needed when it matters most.

But preparedness cannot simply be assumed; it must be tested.

Dry runs and simulation exercises help to test our procedures and resolution tools – bail-in as well as transfer tools – while strengthening coordination within and beyond the Banking Union.

Recently for example, the Financial Stability Institute organised such an exercise to test the cooperation between SRM authorities and resolution authorities from EU and non-EU countries in the CESEE region, including Austria, Hungary as well as Bosnia and Herzegovina³.

Does this crisis exercise setup sound familiar? It is.

Let me remind you that Sberbank operated in eight markets in the CESEE region. Its collapse did not stop at the borders of the Banking Union. It immediately spilled over into the neighbouring countries, underscoring a fundamental lesson: we need stronger cooperation to ensure that we can act decisively when a crisis hits.

That is why capabilities beyond MREL matter so much: without them, resolution is not possible.

Conclusion

Let me conclude.

My central message today is that MREL is essential, but it is only part of the solution. While it provides the resources for resolution, banks and authorities must have the capabilities to use them effectively.

Developing MREL capital markets is therefore a crucial step towards a more resilient and competitive banking sector in the CESEE region. But these markets must go hand in hand with robust crisis preparedness measures, so that resolution can be carried out with confidence and success.

Does this mean that MREL is an “intangible” instrument?

Even if I decided not to develop this element today, let me say that the specific EU translation of loss-absorbing capacity is, to say the least, not the simplest one in terms of quantity, quality and location.

That is why, at the SRB, we welcome the European Commission’s communication to issue a package of changes, aiming at increasing competitiveness and simplifications of the EU banking sector. MREL can be part of this package, for sure, under a holistic approach and with a view not to hinder the resilience built during these 10 last years.

We are ready to contribute to this debate.

Thank you for your attention.

1. According to the latest MREL dashboard for H2 2025, banks under the SRB’s remit have issued an average of EUR 296 billion per year in the period from 2021 to 2025. The dashboard is available here.

2. The full information is available here: https://www.ebrd.com/home/work-with-us/projects/psd/51602.overview.html 

3.  The FSI cross-border simulation exercise included the SRB, ECB, EC as well as national authorities from Austria, Hungary, Romania and Bosnia and Herzegovina. It simulated the crisis response to a scenario combining a write down and conversion with a sale of business strategy.