MREL and TLAC: The Path from Bail-out to Bail-in for Banks' Creditors in the European Union
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MREL and TLAC: The Path from Bail-out to Bail-in for Banks' Creditors in the European Union
Credit and Capital Markets – Kredit und Kapital, Vol. 50 (2017), Iss. 3 : pp. 337–362
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Dipl.-Volkswirt Stefan Best, Lecturer of Finance and Risk Management, Wiesbaden Business School, Hochschule RheinMain University of Applied Sciences, Bleichstra???e 44, 65183 Wiesbaden, Germany
Prof. Dr. Oliver Read, Professor of Finance, Wiesbaden Business School, Hochschule RheinMain University of Applied Sciences, Bleichstra???e 44, 65183 Wiesbaden, Germany
Abstract
In the wake of the financial market crisis new rules on banking recovery and resolution of systemic banks have been enacted in order to facilitate the bail-in of banks' creditors. Banks will be required to maintain sufficient amounts of own funds and bail-inable debt called Minimum Requirement for own funds and Eligible Liabilities (MREL) or Total Loss-Absorbing Capacity (TLAC) respectively. Hence even more competing norms exist in parallel most of which aim to correct the results of banks' internal models which have often times underestimated risks. Because the multitude of new and existing rules overlap, reducing unnecessary complexity is needed and can be accomplished without changing capital and MREL requirements overall. A pro-forma analysis relating to a sample of 23 systemically important banks in the European Union support this view.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Stefan Best / Oliver Read: MREL and TLAC: The Path from Bail-out to Bail-in for Banks’ Creditors in the European Union | 1 |