Paragraphs 3 and 4 of Article 45f of Directive 2014/59/EU, as amended by Directive (EU) 2019/879 (BRRD), state that the resolution authority “may waive” the application of that Article to a subsidiary that is not a resolution entity where the conditions provided therein are met.

The use of the word “may” indicates that this is a discretionary power. Resolution authorities are thus free to waive or not to waive the application of the MREL requirement to a subsidiary that is not a resolution entity (internal MREL), within the framework of the exercise of the recognised discretion. This means that, when deciding whether to grant the waivers provided for in paragraphs 3 and 4 of Article 45f BRRD, and provided that the conditions mentioned therein are met, the resolution authority can assess additional conditions.

However, resolution authorities must exercise the freedom to grant or not to grant the waivers in a way that is consistent with the objectives pursued by those waivers and that does not deprive them of their practical effect. In this respect, it is important to note recital (20) of Directive (EU) 2019/879, which indicates that the MREL that applies to institutions or entities that are not resolution entities “should allow resolution authorities to resolve a resolution group without placing certain of its subsidiaries under resolution, thus avoiding potentially disruptive effects on the market”.

With regards to the parallel provisions in the Regulation (EU) No 806/2014, as amended by Regulation (EU) 2019/877 (SRMR), it should be noted that the conditions of points (d) to (f) of both paragraphs (3) and (4) of Article 45f BRRD were purposefully not mirrored in Article 12h SRMR by the co-legislators. This difference must be duly taken into account by the Single Resolution Board (SRB) and the national resolution authorities when applying the SRMR provisions. This is particularly relevant for the SRB, in light of the principles established in cases C-9/56 and C-10/56 (Meroni v High Authority [1957/1958] ECR 133). Apart from these constraints, the above considerations still apply.

Disclaimer:

The answers clarify provisions already contained in the applicable legislation. They do not extend in any way the rights and obligations deriving from such legislation nor do they introduce any additional requirements for the concerned operators and competent authorities. The answers are merely intended to assist natural or legal persons, including competent authorities and Union institutions and bodies in clarifying the application or implementation of the relevant legal provisions. Only the Court of Justice of the European Union is competent to authoritatively interpret Union law. The views expressed in the internal Commission Decision cannot prejudge the position that the European Commission might take before the Union and national courts.