Comparing TLAC and the current MREL requirement

While both the TLAC standard and the MREL share the same objective, their concepts differ. MREL has already been introduced in the EU by way of the BRRD and, unlike TLAC which is based on RWAs, the current MREL requirement is expressed as a percentage of an institution‘s total liabilities including regulatory capital. Neither is there a binding minimum level for MREL in the directive. The competent resolution authority is to set an individual MREL for each institution. Table 1 provides an overview of the differences:In terms of scope, MREL applies to all banks in the EU (as covered by the BRRD) and not only systemically important institutions. Instead of setting a mandatory fixed minimum Pillar 1 requirement for all institutions as TLAC does, the MREL will be determined on a case-by-case approach, i.e. not a minimum standard but one set individually for each bank (Pillar 2 only)