Points (a) and (b) of Article 45(3)a(1) Directive 2014/59/EU (BRRD) should be interpreted as prerequisite conditions in order to apply the exemption from MREL to mortgage credit institutions financed by covered bonds.

The mortgage credit institutions financed by covered bonds have a specific treatment because in some legal regimes, they are, by law, subject to insolvency proceedings: they do not take deposits and, partly on that basis, the national legislator has made the choice not to put them into resolution but into insolvency. Moreover, to ensure that losses are absorbed by creditors including, where relevant, holders of covered bonds and not by injecting public funds, point (b) explicitly states that the national insolvency procedure applicable to such institutions must comply with the resolution objectives.

Disclaimer:

This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General Financial Stability, Financial Services and Capital Markets Union) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.