03 August 2020
The European Banking Authority (EBA) published today its final draft Implementing Technical Standards (ITS) on disclosure and reporting on the G-SII requirement for own funds and eligible liabilities (TLAC) and the minimum requirements for own funds and eligible liabilities (MREL). This is the first time that the EBA has developed disclosure and reporting requirements in this area, thus expanding the scope of the existing Pillar 3 and supervisory reporting frameworks in the EU.
The EBA sought to maximise efficiency for entities when complying with their disclosure and reporting obligations and to facilitate the use of information by authorities and market participants. For these purposes, MREL and TLAC are presented in an integrated manner, both in the reporting and disclosure templates. The reporting and disclosure requirements are enshrined in a single set of ITS and a mapping between the quantitative information that has to be disclosed and the data that has to be reported is provided.
The ITS also seek to maximise the consistency and comparability of disclosures under these ITS with the templates and definitions included in the relevant Pillar 3 standards of the Basel Committee on Banking Supervision (BCBS), in order to reinforce market discipline.
The disclosure and reporting requirements on TLAC apply only to G-SIIs, entities that are part of G-SIIs and material subsidiaries of non-EU G-SIIs. The disclosure and reporting requirements on MREL apply to entities other than those whose resolution plan provides that they would be wound up under normal insolvency proceedings.
The final draft ITS were submitted to the European Commission for adoption.
The publication of the technical package accompanying the reporting requirements and including the Data Point Model (DPM), validation rules and XBRL taxonomy is expected in the third quarter of 2020.
The provisions on the disclosures on TLAC apply immediately after the adoption and entry into force of the ITS. The provisions on disclosures on MREL apply from 1 January 2024 at the earliest.
The first reference date for reporting in accordance with the ITS is the 30 June 2021 (reporting framework 3.0) both for MREL and TLAC.
The ITS have been developed in accordance with the mandates included in Articles 430 and 434a CRR and Article 45i BRRD.
Regulation (EU) 2019/876 (the ‘CRR2’) and Directive (EU) 2019/879 (the ‘BRRD2’) implement the Financial Stability Board (FSB) total loss-absorbing capacity (TLAC) standard in the EU and amend the minimum requirement for own funds and eligible liabilities (MREL) that has been in force since 2014. MREL and TLAC (the latter being formally known as ‘the G-SII requirement for own funds and eligible liabilities’) must be met at all times. To enable market participants and authorities to scrutinise compliance with both requirements, the revised Capital Requirements Regulation (CRR2) and Bank Recovery and Resolution Directive (BRRD2) also include disclosure requirements and supervisory reporting requirements.