The SRB publishes today its MREL dashboard for Q2.2023. The MREL dashboard presents the evolution of MREL targets and shortfalls for resolution (external MREL) and non-resolution entities (internal MREL) as well as the level and composition of resources of resolution entities in the quarter. In addition, it highlights recent developments in the cost of funding and provides an overview of gross issuances of MREL-eligible instruments.

Key findings:

• For resolution entities, the average MREL final target including the Combined Buffer Requirement (CBR) was equal to 27.3% of the Total Risk Exposure Amount (TREA), growing marginally compared to Q1.2023.

• Banks continued to make progress in building up their levels of MREL. In aggregate terms, the total MREL shortfall (including the CBR) against final targets of resolution entities decreased significantly, reaching EUR 13.6 bn (corresponding to 0.2% TREA). Only 4% of the total shortfall (EUR 589 mn) was related to entities with a final MREL becoming binding on 1st January 2024.

• For non-resolution entities, the overall MREL shortfall against final targets (including the CBR) also reduced over the quarter, amounting to EUR 8 bn (corresponding to 0.3% TREA). 

• Banks under the SRB remit overall issued EUR 78.4 bn of MREL-eligible instruments, above the levels reported during the same period in 2021-2022.

• After a short period of market volatility in the first quarter, spreads started tightening since May, which allowed banks to benefit from more favourable issuance conditions. At the beginning of July, funding costs returned to levels close to the period preceding Silicon Valley Bank and Credit Suisse crises, showing that market confidence had restored. Supported by spreads tightening, the month of September started strong in terms of issuances, with a range of issuers being able to tap the market.

• The SRB is monitoring the closing of the shortfall before the final target date (1st January 2024) and the MREL funding conditions.