On May 23, 2016, the European Commission adopted RTS on criteria relating to the methodology for setting the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). MREL is the European equivalent of US TLAC. There are some differences between the adopted RTS and the final draft RTS submitted by the European Banking Authority with its Opinion published in February 2016 which expressed disagreement with certain of the European Commission's proposed amendments to the final draft RTS submitted in July 2015.
In its Opinion, the EBA had agreed that the RTS should not set a minimum contribution to loss absorption and recapitalization of 8% of total liabilities and own funds for systemic institutions but proposed that the RTS should require resolution authorities to assess whether the burden-sharing requirements set out in the Bank Recovery and Resolution Directive would be met. The EBA had also disagreed with the change to the transitional compliance period to "as short as possible" on the basis that it would create legal uncertainty for firms. The adopted RTS do not take into account the EBA's concerns on the Commission's amendments.
The adopted RTS must still be approved by the European Parliament and the Council of the European Union and be published in the Official Journal before they can enter into force.
The RTS are available at: http://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/3-2016-2976-EN-F1-1.PDF.
The Opinion is available at: http://www.eba.europa.eu/documents/10180/1359456/EBA-Op-2016-02+Opinion+on+RTS+on+MREL.pdf.
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