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Online seminar ‘Lost in TLAC’

On 18 January Professor Tobias Tröger, Chair of Private Law, Trade and Business Law and Jurisprudence at Goethe-University Frankfurt am Main delivered an online seminar entitled ‘Lost in TLAC’.

The one-hour talk examined the Financial Stability Board’s Total Loss-Absorbing Capacity (TLAC) requirements, with a particular look at the European Banking Authority’s Minimum Requirement for Own Funds and Eligible Liabilities (MREL) prescriptions in the Bank Recovery and Resolution Directive (BRRD).

The need to understand correctly the implications and implementation issues of TLAC requirements stems from the fact that regulators, both globally and in Europe, prescribe minimum standards for the amount and quality of loss bearing capital in order to compel private sector loss participation in case of a bank’s failure. In fact, a bail-in of investors in banks, which resulted from the consequences of the great financial crisis of 2007 and 2008, not only would spare tax payers, but also re-instill market discipline by undoing implicit government guarantees.

In a stimulating presentation, Professor Tröger discussed the prescriptions of TLAC and MREL, highlighting their mutual interconnections and the linkages with bail-in objectives. Participants were asked to provide their live feedback on a number of issues, including the necessity for more rigid restrictions on the holdings of TLAC/MREL, the consideration of cross-border groups as resolution entities and the recent MPS case.

Click here to download the slides of the presentation.

The full recording of the event is available here: