Regulation (EU) 2022/2036

What it is

to amend Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (CRR) and Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (Bank Recovery and Resolution Directive or BRRD) as regards the prudential treatment of global systemically important institution groups with a multiple point of entry resolution strategy and a methodology for the indirect subscription of instruments eligible for meeting the minimum requirement for own funds and eligible liabilities (the so-called ‘daisy chain’ proposal). PROPOSED ACT: Regulation of the European Parliament and of the Council. ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council. BACKGROUND: the proposal is part of a reform of EU banking regulation aimed at ensuring that EU banks become more resilient to possible future economic shocks, while contributing to Europe's recovery from the COVID-19 pandemic and the transition to climate neutrality. The Committee on Economic and Monetary Affairs adopted the report by Jonás FERNÁNDEZ (S&D, ES) on the proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) No 575/2013 and Directive 2014/59/EU as regards the prudential treatment of global systemically important institution groups with a multiple point of entry resolution strategy and a methodology for the indirect subscription of instruments eligible for meeting the minimum requirement for own funds and eligible liabilities. As a reminder, the so-called ‘Daisy Chain’ proposal introduces targeted adjustments that will play an essential role in improving an institution’s resolvability. It amends the Union bank resolution framework by: - incorporating a dedicated treatment for the indirect subscription of instruments eligible for internal minimum requirement for own funds and eligible liabilities (MREL); - further aligning the treatment of global systemically important institution (G-SII) groups with a Multiple Point of Entry (MPE) resolution strategy with the treatment outlined in the FSB’s international Total Loss-absorbing Capacity Term Sheet (the ‘TLAC standard’); - clarifying the eligibility of instruments in the context of the internal TLAC. The committee recommended that the European Parliament’s position adopted at first reading under the ordinary legislative procedure should amend the Commission's proposal as follows: Consolidated calculation for G-SIIs with multiple resolution entities To ensure consistency, the calculation should also take into account all third-country entities belonging to a G-SII that would be resolution entities if they were established in the Union. The templates for the public disclosure of harmonised information on the minimum requirement for own funds and eligible liabilities and on the requirement for own funds and eligible liabilities for material subsidiaries of non-EU G-SIIs should be amended to reflect the new deduction regime for internal MREL eligible instruments. The disclosure templates should also be…

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