(1)

The harmonised minimum level of the Total Loss-Absorbing Capacity (TLAC) Term Sheet (‘TLAC standard’) for global systemically important institutions (G-SIIs) (‘the TLAC requirement’) has been introduced into Union legislation by Regulation (EU) 2019/876 of the European Parliament and of the Council (3) amending Regulation (EU) No 575/2013. The institution-specific add-on for G-SIIs and the institution-specific requirement for non-G-SIIs, referred to as the minimum requirement for own funds and eligible liabilities (MREL), have been established through targeted amendments to Directive 2014/59/EU introduced by Directive (EU) 2019/879 of the European Parliament and of the Council (4). Reporting and disclosure requirements for both TLAC standard and MREL are now included in Regulation (EU) No 575/2013 and Directive 2014/59/EU, respectively.

(2)

As the TLAC standard and the MREL pursue the same objective of ensuring that institutions and entities established in the Union have sufficient loss-absorbing and recapitalisation capacity, the two requirements should be complementary elements of a common framework. It is therefore appropriate to establish a set of templates for the reporting and public disclosure of harmonised information on the requirement for own funds and eligible liabilities for G-SIIs and material subsidiaries of non-EU G-SIIs (TLAC) and the institution-specific MREL applicable to all institutions.

(3)

Pursuant to Article 434a of Regulation (EU) No 575/2013, the draft implementing technical standards to be developed by the European Banking Authority (EBA) in order to establish uniform disclosure formats are to seek to maintain consistency of disclosure formats with international standards on disclosures in order to facilitate comparability of information. The Basel Committee on Banking Supervision (BCBS) published in December 2018 updated Pillar 3 disclosure requirements, including requirements on TLAC disclosures. The disclosure formats and associated instructions set out in this Regulation should therefore be consistent with those updated disclosure requirements of the BCBS.

(4)

To ensure that compliance costs for institutions are not unreasonably increased and that data quality is maintained, reporting and disclosure obligations should be aligned in their substance to the maximum extent possible with each other, including in terms of their frequency. Moreover, an alignment of the implementing technical standards on reporting and disclosure obligations for TLAC and MREL is explicitly required by the third subparagraph of Article 45i(5) and the third subparagraph of Article 45i(6) of Directive 2014/59/EU. It is therefore appropriate to set out, in a single Regulation, standards applicable to both reporting and disclosure of TLAC and MREL. At the same time, the granularity and frequency of both reporting and disclosures should be adjusted as appropriate, having regard to the requirements set out in Regulation (EU) No 575/2013 and in Directive 2014/59/EU, respectively, and to the need to ensure that institutions meet those requirements at all times.

(5)

Directive 2014/59/EU requires information on MREL to be reported to both competent and resolution authorities. Regulation (EU) No 575/2013 requires information on TLAC to be reported to competent authorities only. However, pursuant to Article 45d(1) of Directive 2014/59/EU, MREL of a resolution entity that is a G-SII or part of a G-SII consists of the TLAC requirement and any additional add-on. It is therefore appropriate to ensure that resolution authorities obtain information on TLAC from G-SIIs as part of their MREL reporting. This should be without prejudice to arrangements concluded by competent authorities and resolution authorities to minimise data flows.

(6)

Article 45i(5) of Directive 2014/59/EU requires the draft implementing technical standards to be developed by EBA to specify a standardised way of providing information on the ranking of own funds and bail-inable liabilities applicable in national insolvency proceedings in each Member State, for reasons of comparability and legal certainty. Standardised information on insolvency hierarchies in each Member State, and timely updates thereof, should therefore be made available by the respective resolution authorities to institutions under their jurisdiction. That information should follow a standardised presentation of insolvency hierarchies.

(7)

As regards bail-inable liabilities that are governed by the laws of a third country, Article 45i(5) of Directive 2014/59/EU also requires the draft implementing technical standards to be developed by EBA to specify a standardised way of providing information that indicates third countries whose laws govern such liabilities and, for each third country identified, whether such liabilities contain the contractual term recognising that they may be subject under that Directive to write down and conversion powers. Due to the need to further assess the level of granularity for the reporting of these elements, the related instructions and templates will be developed and submitted by EBA to the Commission separately in due time in order to enable both competent and resolution authorities to have access to this information on a regular basis. The absence of these limited additional elements will neither affect nor delay the application of the reporting requirements provided in this Regulation.

(8)

Disclosing entities should take into account the relevant Guidelines issued by EBA when assessing whether information is material, proprietary or confidential in accordance with Article 432 of Regulation (EU) No 575/2013.

(9)

The obligation to report and disclose information on TLAC laid down in point (b) of Article 430(1), Article 437a and point (h) of Article 447 of Regulation (EU) No 575/2013 has applied since 27 June 2019, in accordance with the second subparagraph of Article 3(3) of Regulation (EU) 2019/876. Consequently, once this Regulation enters into force, G-SIIs and material subsidiaries of non-EU G-SIIs should immediately disclose information on TLAC using the templates and following the instructions laid down in this Regulation. In contrast, reporting on the TLAC requirement in accordance with this Regulation should start to apply only from 28 June 2021, to provide institutions and competent authorities with sufficient time to implement the relevant requirements.

(10)

In relation to MREL, the reporting obligations set out in Directive 2014/59/EU are to apply at the latest from 28 December 2020. However, for the same reasons as for TLAC, all institutions should report information on MREL using the templates and following the instructions laid down in this Regulation from 28 June 2021. In contrast, the date of application of MREL disclosure obligations should coincide with the end of the transition period pursuant to the third subparagraph of Article 45m(1) of Directive 2014/59/EU, i.e. on 1 January 2024 at the earliest.

(11)

Given the need for institutions, competent authorities and resolution authorities to adapt their reporting and electronic systems to the requirements laid down in this Regulation, the quarterly reporting remittance date for data relating to the reference date 30 June 2021 should be 30 September 2021 at the latest.

(12)

This Regulation is based on the draft implementing technical standards submitted to the Commission by the EBA.

(13)

EBA has conducted open public consultations on the draft implementing technical standards on which this Regulation is based, analysed the potential related costs and benefits and requested the advice of the Banking Stakeholder Group established in accordance with Article 37 of Regulation (EU) No 1093/2010 of the European Parliament and of the Council (5),