The euro area's biggest banks will be asked to earmark fundsequivalent to more than twice their minimum capital requirements tomake sure a possible emergency doesn't cost taxpayers, according toElke Koenig, head of the Single Resolution Board.

The Brussels-based SRB, the resolution authority for 142 banksincluding Deutsche Bank AG and BNP Paribas SA, will use the minimumcapital requirement set by the European Central Bank as a proxyfor funds that would be needed to absorb losses and allowrecapitalization in a crisis, Koenig said in an interview thismonth. The ECB last year set an average requirement for thehighest-quality capital of 9.9% of risk-weighted assets.

Requiring banks to have at least the same amount again inloss-absorbing liabilities will ensure that they can recapitalizethemselves quickly after restructuring, Koenig said.This minimum requirement of own funds and eligibleliabilities, or MREL, is calculated at the “30,000-foot level,” andmore precise levels tailored to each bank will follow afterthe ECB sets new capital requirements and changes are made tocapital, bank-failure and insolvency rules, she said.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.