MREL · Concepts · European Finance Observatory

Roles that need it

TLAC (Total Loss-Absorbing Capacity)TLAC is the Financial Stability Board standard requiring global systemically important banks to hold loss-absorbing capital and debt of at least 18% of risk-weighted assets and 6.75% of the leverage exposure. The EU applies it through the CRR and aligns it with MREL.
Bail-inBail-in is the resolution tool that writes down or converts into shares the claims of a failing bank's shareholders and creditors, so that they bear the losses instead of taxpayers. It follows the creditor hierarchy, and covered deposits are protected.
Resolution planningResolution planning is the work by which resolution authorities, with input from the bank, prepare how a failing bank would be resolved: the preferred strategy, the tools, critical functions and the obstacles to remove. In the banking union the Single Resolution Board leads it.
Tier 2 capitalTier 2 capital is gone-concern capital, mainly subordinated debt with an original maturity of at least five years, which absorbs losses if a bank fails. Its recognition amortises in the final five years before maturity. Tier 1 plus Tier 2 gives total capital, or own funds.

Updated 31 Oct 2026.