Update from Oslo Banking Seminar

On January 31 Nordea Markets held the annual Banking Seminar in Oslo and it has become quite a tradition and this year marks the 7th edition.

Some 130 guests attended the seminar and was welcomed by Lars-Christian Kran, Country Executive Nordea Markets Norway, who also introduced the seminar’s keynote speaker, Nordea CEO Casper von Koskull. Casper spoke about how Nordea is navigating in a changing environment and how many of the financial regulations that was introduced after the financial crisis have been implemented but still a few key regulatory initiatives remain to be implemented.

Our second speaker, Petra Mellor, Head of Bank Debt, Nordea Treasury spoke about “MREL at Nordea Treasury”. We spent some time with Petra to learn more about her keynote topic, MREL.

MREL stands for Minimum Requirement for own funds Eligible Liabilities. It is a regulatory requirement that European banks are required to meet. MREL is intended to ensure sufficient loss absorption and recapitalisation of a bank upon resolution. To meet its MREL requirement, Nordea started to issue a new form of notes, Senior Non Preferred Notes (“SNP”), during 2018. SNP rank more senior than other subordinated instruments such as AT1 and T2, but more junior than normal Senior bonds.

Petra explains: “Each bank’s MREL level is determined on an individual basis. Thus, the requirement depends on the bank’s risk level, size and other characteristics. The final objectives are firstly to ensure that the bank set aside an appropriate portion of own funds and eligible liabilities to absorb potential losses and secondly to enable the bank to recapitalise without the need for using public funds”. MREL is an important part of legislation designed to ensure that banks have enough liabilities to prevent taxpayers from having to bear any burden of future bank bailouts.

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