The European Commission (“Commission”), on 23 November 2016, released its legislative proposals to amend the EU’s Bank Recovery and Resolution Directive (“BRRD”) to provide more detailed rules relating to the setting of MREL for European banks, among other things. The availability of sufficient loss-absorbing capacity is crucial to the successful resolution of a bank group, especially where the resolution will entail a bail-in strategy. In order to ensure that a bank has sufficient loss-absorbing funds available to effect a successful resolution in the event of its failure, the BRRD established that all EU banks (whether systemically important or not) would be required to hold a minimum level of loss-absorbing capital and other liabilities – such level to be set on a bank group-by-bank group basis by the relevant EU resolution authority.

The legislative package consists of...