Update to questions and answers about MREL

8 October 2018

In February 2017, the Debt Office published a decision memorandum on the minimum requirement for own funds and eligible liabilities (MREL). A compilation of the Debt Office’s answers to questions about specific details in the memorandum is available on our website. Today, we have published an updated answer regarding monitoring compliance with the liabilities proportion principle. The revision will be applied from 31 December 2018.

The revision is due to the decision by Finansinspektionen (the Swedish Financial Supervisory Authority) to move the risk weight floor for Swedish mortgages from Pillar 2 to Pillar 1. This has certain consequences for calculating the MREL requirement and the associated principle that MREL must be met with a certain proportion of liabilities (the liabilities proportion principle). The Debt Office addresses these consequences in its consultation response to “Changed method for the application of the risk weight floor for Swedish mortgages” (in Swedish).

The proportion of liabilities is affected by a temporary calculation effect that must be neutralised through certain adjustments to how the liabilities proportion principle is applied. The Debt Office’s revised answer explains how these adjustments shall be made.

To read all the questions received by the Debt Office regarding the memorandum and see the answers, click on the following link: Questions and answers about MREL

Want to know more about resolution? Read the Debt Office’s decision in December on MREL and plans for dealing with banks in crisis.

Contact

resolution@riksgalden.se