The main negative impact stems from the fact that the envisaged deductions will lead to a higher inter-nal MREL issuance at the level of the intermediate entity. For liquidity-rich, deposit funded intermediate entities, this means an artificial balance sheet inflation, as the surplus liquidity out of the iMREL issuance will be placed back to the Resolution Entity, thereby inflating also its balance sheet. Albeit those transac-tions being intra-group, there could be significant negative P&L impacts due to:
 Banking taxes being levied on the solo-unconsolidated balance sheet of local banks
 Resolution Fund Contribution Fees, which are also levied on the solo-unconsolidated balance sheet of banks. In order to mitigate the negative impact on this, we suggest that EBA re-considersthe definition of the contribution base on which Resolution Fund Contributions are based and also include a deduction item for all iMREL eligible instruments, instead of Own Funds only.
In addition, and as pointed out above under point 1) the functioning of institutional protection schemes is not properly reflected in the current RTS. Such IPS are set-up and also approved by competent authorities in a way which enables the efficient up- and/or side-streaming of losses and ensures recapitali-zation in case of need. Not reflecting the IPS within the RTS can result in a deviating treatment both for regulatory capital and internal MREL purposes.