ECB Opinion on Implementation of TLAC


On November 10, 2017, the European Central Bank (“ECB“) published an opinion (dated November 8, 2017) on the European Commission’s legislative proposals to implement the Financial Stability Board’s (FSB) total loss absorbing capacity (“TLAC“) standard.

The opinion relates to the Commission’s legislative proposals to amend the following Regulations and Directive in order to implement TLAC in the EU: Bank Recovery and Resolution Directive (2014/59/EU) (“BRRD“), Regulation for Single Resolution Mechanism (Regulation 806/2014) (“SRM Regulation“), CRD IV Directive (2013/36/EU) and Capital Requirements Regulation (Regulation 575/2013) (“CRR“). The Commission published its legislative proposals in November 2016.

The ECB welcomes these proposals but highlights some areas for consideration, including issues relating to:

Implementation of the TLAC standard in the EU;

  • Amendments to the minimum requirement for own funds and eligible liabilities (“MREL“);
  • Transitional arrangements for MREL;
  • Early intervention measures; and
  • Pre-resolution moratorium tool.

Specific proposals to amend the drafting of the proposed Regulations and Directive, together with some additional proposals to amend the current texts of the BRRD, SMR Regulation, CRR and CRD IV Directive are set out in a technical working document, which is attached to the opinion.