News 6 July 2021
In accordance with the Capital Requirements Regulation, a bank or institution must apply for permission from the Swedish National Debt Office in order to call, redeem, repay, or repurchase eligible liabilities.
These actions are collectively referred to below as “repurchases”. Due to the amendments to the Resolution Act (2015:1016) that took effect on 1 July 2021, and the European Banking Authority’s statements1, the Debt Office has updated its information about repurchases. The key points are as follows:
- All eligible liabilities, including those that are not subordinated, are subject to permission for repurchase starting 1 January 2022.
- Allow four months for the processing of an application. In order for an application to be reviewed before 1 January 2022, it must be submitted to the Debt Office by 31 August 2021 at the latest.
- Permission for the repurchase of eligible liabilities applies to all institutions for which the Debt Office shall determine a minimum requirement for own funds and eligible liabilities. Thus, this includes institutions that are not systemically important. However, the Debt Office has chosen to grant these institutions a simplified general prior approval, which means that, in practice, they will not be required to apply for permission.
- As a matter of protocol, it should be evident in the issuance documentation that an eligible liability may only be repurchased following permission from the Debt Office – although the absence of such information does not disqualify a liability from being eligible.
Memorandum: Repurchase of eligible liabilities This document is currently available only in Swedish.
Questions and answers about MREL
1 Final Report, Draft Regulatory Technical Standards on own funds and eligible liabilities amending Delegated Regulation (EU) No 241/2014 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards for Own Funds requirements for institutions, EBA/RTS/2021/05.