Insider Economy Turmoil over proposed MREL introduction bill

Turmoil over proposed MREL introduction bill

There is turmoil over the Legal Service’s bid to propose amendments to a bill designed to provide a capital ‘cushion’ for the protection of  depositors in the case of resolution or liquidation of a credit institution through the establishment of eligible liability instruments, but without first informing the Central Bank of Cyprus.

The Ministry of Finance was informed over the legal proposal but failed to inform CBC which argues that this creates a lot of confusion.

CBC representative Michalis Stylianou yesterday told the House Finance Committee that the supervisory body disagrees with this regulation since it concerns the classification of claims in the event of a bank’s insolvency.

He said that the current procedure’s classification structure would not apply, creating additional problems. And Maria Kettirou who was representing  the legal department of CBC also explained that the bill removes any claims the CBC may have towards a particular banking institution as well as any obligation of the banking institution towards the state.

On behalf of the Ministry of Finance, Andreas Charalambous asked for the bill to be approved as it is now and the Ministry would then come up with a new one that will include the provisions that have been left out.

Substantially, the bill introduces Minimum Requirement for own funds and Eligible Liabilities (MREL) through the setting up of a new bond that, in a case of resolution or liquidation, this is classified after the shareholders. These securities do not count towards the bank’s capital but should only be set up for resolution or liquidation purposes.

Specifically, a new category is introduced into the grading in the event of a resolution or liquidation, which up until now was first the shareholders, the debtors and then the depositors. The new category will allow banks to raise sufficient funds to allow them to absorb losses so as not to affect the depositor and the taxpayer when in trouble.

Read more:


Top Stories

WHO reports record daily increase in global coronavirus cases

The World Health Organization reported a record increase in global coronavirus cases on Sunday, with the total rising by 230,370 in 24 hours. The biggest...

Seven new Covid-19 cases on Sunday

  Seven people have tested positive for coronavirus after 1176 tests, the Health Ministry said on Sunday. Five of the new cases were detected from 301...

Nicosia: Biker in critical condition after collision

  A 19 year old biker is in critical condition in hospital after his bike was involved in a collision with a car on Nicosia's...

Yellow alert for third day in a row

  The heat wave is set to continue tomorrow, with the Met Office issuing yet another extreme high temperature warning -- the third in a...

Any prospects for resumption of Cyprus talks would require termination of Turkish provocations

    Any prospects for the resumption of UN-led talks for a settlement to the Cyprus problem would require the termination of the Turkish provocative violations...


Kolokasi (Taro Root)

Ingredients: (Serves 4) 1 kg kolokasi (taro) root ½ kg pork (lean belly pork or shoulder) cut into large cubes 6 tbsp olive oil 1 head of fresh celery,...


Moungra is a traditional Cypriot mezze which consists in cauliflower pickled in fermented bread dough and typically served as an appetizer or meze. It...

Cheesy Eggplant Rolls

Ingredients 4 Eggplants 2 tbsp olive oil 1 chopped onion, 2 grated carrots 1 garlic clove (sliced) ¾ of the cup finely chopped canned tomato, ½ ts sugar 1 ts oregano 2 tbsp...

Black eyed peas with chard (Louvia me laxana)

Ingredients: 2 cups black eyed peas small lemon (juice) + 1 tsp lemon zest 1 bunch Cypriot chards olive oil & lemon for serving salt & pepper Method: Step 1 Put the...