MREL: show and tell

It shouldn't be unreasonable to dream of a full disclosure of minimum requirements for own funds and eligible liabilities (MREL) for EU banks.

  • By Tyler Davies
  • 05 Jul 2018
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The Single Resolution Board is creeping through Europe to tell banks about their binding MREL needs, based on its 2017 policy.

ING received its targets just this week, a good couple of months after the first banks began publishing their MREL demands. Other financial institutions are still waiting.

This slow progress is frustrating, but it is nothing compared with the angst caused by the loose disclosure requirements in force in Europe.

The SRB has shied away from taking some of the MREL disclosure burden on to its own shoulders, which is standard practice in the UK.

But it has also stopped short of making banks make any effort to publish their own requirements.

This has led to a splintered approach to disclosure that doesn’t help anybody.

Some banks are coming forward with their MREL targets and others are not — leading to guesswork, speculation and an unfortunate lack of clarity for investors.

All of this would be academic if MREL requirements were not so important.

EU institutions have spent a lot of effort reinforcing the idea that an MREL breach should be treated just as seriously as a solvency breach.

In the latest round of fiddling with the capital requirements directive (CRD), for example, lawmakers have made sure that a breach of MREL can lead to a bank’s coupon and dividend payments being switched off.

Market participants should hope that the lack of uniformity on disclosure is simply a teething problem, because it is in everybody’s interest that these important numbers are fully revealed.

If the competent authorities cannot do anything to iron out the inconsistencies, then it is up to the banks themselves.

  • By Tyler Davies
  • 05 Jul 2018

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Rank Lead Manager Amount $m No of issues Share %
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1 Citi 219,258.01 824 8.16%
2 JPMorgan 208,215.92 896 7.75%
3 Bank of America Merrill Lynch 191,951.67 639 7.14%
4 Barclays 168,011.84 595 6.25%
5 HSBC 149,519.66 684 5.56%

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Rank Lead Manager Amount $m No of issues Share %
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1 JPMorgan 29,830.94 52 6.95%
2 BNP Paribas 28,159.68 110 6.56%
3 UniCredit 22,060.45 102 5.14%
4 Credit Agricole CIB 22,050.13 103 5.13%
5 SG Corporate & Investment Banking 21,979.64 84 5.12%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
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1 Goldman Sachs 9,517.23 44 8.70%
2 JPMorgan 9,409.35 41 8.60%
3 Citi 7,643.16 42 6.99%
4 UBS 5,979.77 21 5.47%
5 Deutsche Bank 5,145.17 32 4.70%