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.
MRELMREL, the minimum requirement for own funds and eligible liabilities, is the amount of capital and bail-in-able debt that a bank in the EU must hold so that resolution authorities can absorb losses and recapitalise it. The Single Resolution Board or national resolution authority sets it bank by bank under the BRRD and SRMR.
G-SIB and O-SII (systemically important banks)Global systemically important banks (G-SIBs) are banks whose failure would threaten the world financial system, listed yearly by the FSB. Other systemically important institutions (O-SIIs) are identified nationally in the EU. Both carry extra capital buffers, and G-SIBs must also meet TLAC.
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.
Risk-weighted assets (RWA)Risk-weighted assets measure a bank's exposures adjusted for risk: each exposure is multiplied by a risk weight that reflects its credit, operational or other risk. Capital ratios divide capital by RWA, so RWA also sets how much capital a bank must hold. Also called risk exposure amount.
CRR (Capital Requirements Regulation)The Capital Requirements Regulation, Regulation (EU) No 575/2013, sets the directly applicable EU rules on own funds, capital requirements, liquidity, leverage, large exposures, reporting and disclosure for banks and investment firms. It applies the Basel standards across the single market.
MRELMREL, the minimum requirement for own funds and eligible liabilities, is the amount of capital and bail-in-able debt that a bank in the EU must hold so that resolution authorities can absorb losses and recapitalise it. The Single Resolution Board or national resolution authority sets it bank by bank under the BRRD and SRMR.