2020 Universal registration document and annual financial report - BNP PARIBAS 331
5risks and CaPital adequaCy Pillar 3
5
Capital management and capital adequacy
➤ TABLE 23: HIERARCHY OF CREDITORS OF THE RESOLUTION ENTITY - BNP PARIBAS SA(*) (EU TLAC 3)
In millions of euros
31 December 2020
Insolvency ranking
1 2 2 3 TOTAL
1 Description of insolvency rank
Instruments eligible for
CET1 capital(**)
Instruments eligible for
AT1 equity(**)
Instruments eligible for T2
capital(**)
Non- preferred
senior debt(***)
2 Regulatory capital instruments and debt instruments 107,892 9,948 19,181 52,731 189,752
3 of which excluded debt instruments - - - - -
4 Regulatory capital instruments and eligible debt instruments 107,892 9,948 19,181 52,731 189,752
5 of which instruments eligible for the TLAC ratio 107,892 9,948 19,181 52,731 189,752
6 of which residual maturity ≥ 1 year and < 2 years - - 350 2,779 3,130
7 of which residual maturity ≥ 2 years and < 5 years - - 3,476 20,793 24,269
8 of which residual maturity ≥ 5 years and < 10 years - - 9,126 22,609 31,735
9 of which residual maturity ≥ 10 years (excluding perpetual) - - 6,228 6,550 12,778
10 of which perpetual instruments 107,892 9,948 - - 117,840
(*) The data presented corresponds to the scope of the BNP Paribas SA resolution entity. (**) Amounts before regulatory adjustments. (***) Outstanding principal amount.
MREL
The MREL (Minimum Requirement for own funds and Eligible Liabilities) is intended to apply to all European Union credit institutions and investment firms. The procedures for calculating this requirement, specific to each institution, have evolved as part of the CRR 2 and BRRD 2 texts. Unlike the TLAC, for which the regulatory requirements became applicable immediately after the CRR 2 came into force (27 June 2019), regulatory requirements in relation to the MREL arising from BRRD 2 had to be transposed into French law, which has intervened in December 2020. After an industry consultation period, the SRB published a new set of rules reflecting the regulatory changes in the second quarter of 2020. Institutions are obliged to comply with their MREL requirement from 1 January 2024 at the latest. However, resolution authorities may set a transitional MREL requirement to be met from 1 January 2022. The disclosure requirements related to the MREL ratio will apply as of 1 January 2024.
Changes in regulations
BNP Paribas closely tracks the regulatory developments relating to bank recovery and resolution, in particular:
■ the work of the Financial Stability Board, in particular, on clearing house resolution, liquidity strategy, the practical implementation of bail-in tools, and more generally on requirements on resolution;
■ discussions focused on the creation of a European Deposit Insurance Scheme (EDIS) as the third pillar of the Banking Union. Progress on this issue is expected in 2021. On 10 November 2020, the European Commission published its roadmap on the Banking Union, which should lead to a period of consultation with the banking industry in early 2021;
■ The potential impacts of Brexit on the eligibility of certain liabilities to the MREL.
At 31 December 2020, the Group s TLAC ratio broadly exceeds the applicable minimum level of requirement. This ratio stands at 24.1% of risk-weighted assets, without using senior preferred debt, which are eligible up to a limit of 2.5% of risk-weighted assets. It is 8.4% of leverage exposures taking into account the effect of the temporary exemption for
deposits with Eurosystem central banks in the calculation of leverage exposures, pursuant to Article 500b of Regulation (EU) No. 2020/873.
The debt issuance targets aiming to satisfying these requirements and their nature are described in the section Wholesale funding trends based on regulatory changes in section 5.8 Liquidity risk.
