The Single Resolution Board (SRB) has published its minimum requirement for own funds and eligible liabilities (MREL) dashboard covering the reporting period Q3.2021.
The dashboard shows that, on the whole, banks continue to make progress in building up their level of MREL, the financial instruments each bank must hold to absorb losses and recapitalise in the event of a failure.
The final deadline for the build-up is 1 of January 2024, and the intermediate binding target date was 1 January 2022. The dashboard shows that the shortfall against the 2024 target reduced in the reporting period, and most banks either closed or reduced their shortfalls against the 2022 intermediate target in that quarter.
- In percentage of the total risk exposure amount (TREA), the average MREL final target including the combined buffer requirement (CBR) for resolution entities, to be respected by 1 January 2024, stood at 26.06% TREA, almost stable over the quarter.
- The average MREL shortfall to the final 2024 targets including the CBR reached 0.48% TREA (or EUR 34.6 bn) for resolution entities, reducing significantly from Q2.2021, where it stood at 0.56% TREA (or EUR 40.1 bn) and resulting in the lowest level of the shortfall since Q4.2019.
- For non-resolution entities, the average MREL shortfall (including the CBR) against the final target reduced with respect to Q2.2021 and amounted to 2.11% TREA (or EUR 42.4 bn).
- Banks were aiming to close their shortfall to the intermediate MREL targets to be respected by 1 January 2022. Indeed, most resolution entities with a shortfall in Q2.2021 either fully closed or reduced it over the quarter.
- The average shortfall against the MREL binding intermediate target including the CBR was limited to 0.07% TREA (or EUR 4.9 bn) for resolution entities and 0.54% TREA (or EUR 10.9 bn) for non-resolution entities. Almost all banks were expected to respect the binding intermediate target at year end.
- Due to seasonally low market activity over the first half of Q3, issuances’ volume decreased by 38.2% over the quarter and amounted to EUR 42.9 bn (or 0.6% TREA).
- Funding costs marginally deteriorated, staying slightly above their pre-pandemic levels during the last quarter of 2021.
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