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:

https://in-cyprus.com/additional-regulations-damaging-for-cyprus-banks-bocs-ackermann-says/

 

Top Stories

Partly cloudy on Wednesday, possible afternoon showers

Partly cloudy on Wednesday with isolated showers and possible thunderstorms and hail - mainly inland and in the mountains. Winds will be light in the...

EU takes legal action against ‘golden passport’ schemes in Cyprus, Malta

The European Union's executive said it was launching legal action against Cyprus and Malta over their investor citizenship programmes, also known as "golden passport" schemes. The schemes...

Total of 152 new cases of covid-19 on Tuesday

The Health Ministry announced 153 new COVID-19 cases on 20 October, out of 4,410 laboratory tests, taking confirmed infections to 2, 839. The break-down of...

Stench in Kokkinotrimithia and Mammari due to farms and burned garbage

Citizens of Kokkinotrimithia and Mammari contacted philenews and complained that at the Kafkalla location some people threw a huge quantity of garbage and set...

Police chasing suspects in Paphos

Members of the Anti-Narcotics Unit who were watching some suspects for drug trafficking, according to first information, chased a suspicious vehicle which tried to...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...