A minimum requirement for own funds and eligible liabilities (MREL) does not apply to mortgage credit institutions financed by covered bonds when conditions referred to in Article 45(3) of Directive 2014/59/EU (BRRD) are met.

As regards entities referred to in points (b), (c) or (d) of Article 1 of BRRD, resolution authorities have discretion to decide, after consulting a competent authority, whether to apply MREL to them (see Article 45(7)).

In accordance to Article 45 of Directive 2014/59/EU (BRRD), the obligation to meet, at all times, the requirements for own funds and eligible liabilities is imposed on institutions and entities as referred to in Article 1(1), points (b), (c) and (d), where required by and in accordance with Articles 45 and 45a to 45i.

Pursuant to Article 45e(1) of BRRD, resolution entities are to comply with the requirements laid down in Articles 45b to 45d on a consolidated basis at the level of the resolution group. It follows that resolution entities always have to meet an MREL (minimum requirement for own funds and eligible liabilities), regardless of whether they are an institution or an entity referred to in Article 1(1), points (b), (c) and (d.

As regards entities that are not themselves resolution entities, the determination of an internal MREL by the resolution authority is mandatory with respect to institutions, pursuant to Article 45f(1), first subparagraph.

On the other hand, according with Article 45f(1), second subparagraph, the determination of an internal MREL to an entity referred to Article 1(1), points (b), (c) and (d), that is a subsidiary of a resolution entity, but is not itself a resolution entity, is not mandatory, as it depends on the exercise of a discretionary power of the resolution authority, after consulting the competent authority. However, it should be noted that the third subparagraph, requires Union parent undertakings that are not themselves resolution entities, but are subsidiaries of third-country entities, to comply with internal MREL on a consolidated basis. This means that the determination of internal MREL for entities referred to in Article 1(1), points (b), (c) and (d), that meet the conditions of that third subparagraph is mandatory.

As regards the exemptions and waivers to the obligation to meet MREL at all times,

- According to Article 45a BRRD, mortgage credit institutions financed by covered bonds that fulfil all conditions set out in that Article and that, under their national law, are not allowed to receive deposits, are not required to meet a minimum requirement for own funds and eligible liabilities (MREL).

- Under Article 45f(3) or (4), institutions that are subsidiaries of a resolution entity, but are not themselves resolution entities, can be waived from MREL.

- Under Article 45g, central bodies and credit institutions permanently affiliated to a central body can be waived from MREL.

Disclaimer:

The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.