Permission to reduce eligible liabilities instruments

News 6 July 2023

On 19 April 2023, the European Commission adopted new provisions on, among other things, the process for applications for prior permission for reducing eligible liabilities instruments. The Debt Office will therefore apply the application process set forth in the delegated regulation.

On 19 April 2023, the European Commission adopted new provisions on, among other things, the process for applications for prior permission for reducing eligible liabilities instruments. The provisions have been incorporated into Commission Delegated Regulation (EU) No. 241/2014 of 7 January 2014 supplementing Regulation (EU) No. 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for own funds and eligible liabilities requirements for institutions.

Accordingly, the Debt Office has withdrawn the publication of the memorandum Permission from the Debt Office is required to reduce eligible liabilities instruments prior to their contractual maturity. Commission Delegated Regulation (EU) No. 241/2014 contains provisions on what information needs to be provided in the application.

In that memorandum, the Debt Office stated that the agency intended to grant permission to institutions, for which MREL did not exceed the loss absorption amount, without an application. The described arrangement was based on the European Banking Authority's (EBA) proposed technical standards. It is now certain that the European Commission has not adopted the EBA's proposal. The Debt Office will therefore apply the application process set forth in the delegated regulation.

Minimum Requirement for Own Funds and Eligible Liabilities (MREL)