Final report on final draft ITS amending the ITS on reporting of MREL decisions

General Information

This document is the final report of the European Banking Authority (EBA) published in 2025, entitled "Final report on final draft ITS amending the ITS on reporting of MREL decisions." It is an amended Implementing Technical Standard (ITS) concerning uniform reporting modalities of decisions related to the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). The scope covers resolution authorities within the European Union, financial institutions subject to Directive 2014/59/EU (BRRD), and reporting data from 2021 with implementation planned for December 31, 2025 (p. 1-2).

Executive Summary

The document addresses the revision of Implementing Technical Standards (ITS) related to reporting decisions on MREL, a European regulatory framework ensuring that financial institutions continuously hold sufficient own funds and eligible liabilities to absorb losses in resolution. Directive 2014/59/EU (BRRD) requires resolution authorities, in coordination with competent authorities, to set an MREL for each institution and report these decisions to the EBA. Until now, this reporting was annual, with a deadline on May 31 for data applicable as of May 1, which delayed the inclusion of decisions made after this date in EBA publications. This delay limits the EBA's ability to timely assess convergence of practices and institutions' compliance. The report proposes amending Regulation (EU) 2021/622 to establish bi-annual reporting (June 30 and December 31) with submission deadlines on September 16 and March 18 respectively, to improve data frequency and relevance. Furthermore, it plans to integrate discretionary elements applied by resolution authorities into reporting templates, notably adjustments to the 8% subordination threshold of total liabilities and own funds, as well as distinguishing decisions on internal MREL at sub-consolidated levels. The report also removes obsolete requirements following Directive (EU) 2024/1174, notably for entities in liquidation. These changes do not imply substantial modifications and concern only resolution authorities, which exempted the EBA from a public consultation. Entry into force is planned for December 31, 2025. These amendments aim to strengthen MREL implementation oversight in the EU, improve data quality and frequency, and better reflect authorities' discretionary practices, thereby contributing to enhanced financial stability (p. 3-7).

Context and Objectives

Directive 2014/59/EU (BRRD) establishes a framework for resolving financial institutions, imposing an MREL set by resolution authorities. The EBA is mandated to receive MREL decisions and assess convergence of practices within the EU. Since 2021, authorities annually transmit these decisions via Regulation (EU) 2021/622. However, the annual frequency does not allow timely consideration of decisions adopted after May 1, limiting the EBA's analysis and publication capacity. Moreover, recent regulatory developments and feedback have shown the need to improve reporting modalities, notably to better capture discretionary elements applied by resolution authorities. The main objective is thus to amend the regulation to establish bi-annual reporting, integrate discretionary adjustments, remove obsolete requirements, and reduce certain reported data to improve the quality, relevance, and frequency of information transmitted to the EBA. The scope covers resolution authorities in the EU and institutions subject to MREL, with implementation planned for end 2025 (p. 5-7).

Summary of Key Points by Theme

Reporting frequency: MREL decision reporting changes from an annual to a bi-annual frequency, with two reference dates: June 30 (reported by September 16) and December 31 (reported by March 18). This modification aims to align MREL reporting with MREL/TLAC resources reporting, published semi-annually, and to more accurately reflect resolution cycles in the EU (p. 6).

Discretionary elements: The report highlights the importance of better capturing discretionary adjustments made by resolution authorities, notably the adjustment to the 8% threshold of total liabilities and own funds (TLOF) for subordination, as well as distinguishing decisions related to internal MREL at sub-consolidated levels. This information is essential to assess convergence of practices and regulatory discretion exercise (p. 6-7).

Adaptation to recent legal framework: Following Directive (EU) 2024/1174 (Daisy Chain Act), entities in liquidation are no longer subject to MREL unless an add-on is applied. Simplified reporting for institutions with a zero recapitalization amount is removed, and templates are adjusted accordingly (p. 7).

Reporting simplification and reduction: Certain data deemed redundant or calculable from other information are removed, such as the reference date for Pillar 2 requirements communication, post-resolution balance sheet data, and the obligation to convert data into euro, now allowing reporting in the original currency. These measures aim to reduce the administrative burden on resolution authorities (p. 7).

Adoption process: The amendments do not substantially modify institutions' obligations, address only resolution authorities, and did not undergo a public consultation, deemed disproportionate. The text will be submitted to the European Commission for adoption and published in the Official Journal, with application planned for end 2025 (p. 3-4, 9-11).

Main Findings and Lessons Learned

Findings: Annual MREL decision reporting does not reflect decisions made after May 1 in EBA annual publications, limiting responsiveness and relevance of analyses. The EBA publishes a MREL dashboard and a dedicated section in its risk assessment report, relying on these data (p. 3, 5).

Assumptions: Increasing reporting frequency to twice a year will improve the quality and relevance of data available to the EBA, facilitating better monitoring and evaluation of resolution authorities' practices (p. 6).

Interpretations: Integrating discretionary elements into reporting templates will allow a finer analysis of convergence of practices and regulatory discretion exercise, meeting BRRD requirements (p. 6-7).

Uncertainties: The report does not detail a quantitative evaluation of costs or benefits related to these changes, considering such analysis disproportionate. The operational impact on resolution authorities is thus poorly documented (p. 4, 9).

Lessons learned: Reporting simplification and reduction, as well as adaptation to recent legal developments, demonstrate a willingness to optimize data collection while limiting administrative burden, which should facilitate effective implementation of the amended ITS (p. 7).

Conclusions and Author's Recommendations

The EBA concludes that ITS on MREL decision reporting must be amended to allow bi-annual reporting, improve capture of discretionary elements applied by resolution authorities, and adapt requirements to recent legal developments. These changes, without substantial impact on institutions, aim to strengthen monitoring and evaluation of MREL implementation in the European Union. The report recommends rapid adoption of these amendments, which will be applicable from December 31, 2025. The adoption process foresees submission of the text to the European Commission for publication in the Official Journal, without prior public consultation. These measures will enable better harmonization and transparency in setting and monitoring MREL, contributing to financial stability (p. 3-4, 9-11).