Decision on MREL for Danske Hypotek AB
News 11 April 2019
The Debt Office has made a decision on the minimum requirement for own funds and eligible liabilities (MREL) for Danske Bank’s Swedish subsidiary Danske Hypotek AB. The decision is part of the work conducted by Danske Bank’s resolution college, which is led by the Danish resolution authorities Finanstilsynet and Finansiel Stabilitet, and of which the Debt Office is a participant.
The minimum requirement ensures that the institution has a sufficient amount of own funds and liabilities eligible for write-down, so that it can be restructured without having to use tax revenue. Certain principles apply for how subsidiaries of groups that are to be managed cohesively are to meet MREL. The liabilities shall be subordinated and issued to the institution within the group that is to be put into resolution, usually the parent company. These criteria for liabilities are a prerequisite for the effective implementation of financial crisis management procedures.
Danske Hypotek’s requirement amounts to 4.9 per cent of total liabilities and own funds and applies from 1 July 2019.
Every year, the Debt Office issues decisions on MREL for Swedish banks and other institutions covered by the Swedish resolution process. The results of these decisions are published in December. Danske Hypotek AB is a subsidiary of Danske Bank, which has its domicile in Denmark. Therefore, the decision regarding MREL for Danske Hypotek AB has been made within the framework of Danish resolution procedures.