Directive 2014/59/EU on Bank Recovery and Resolution (BRRD I) was i.a. transposed into Icelandic law with Act No. 70/2020 on the resolution of credit institutions and investment firms (the Act). On 8th of December 2021, the Icelandic Resolution Authority of the Central Bank of Iceland published its policy on minimum requirements for own funds and eligible liabilities (MREL-Requirement) according to Art. 17 of the Act (hereinafter the MREL-Policy).

The Resolution Authority announced today that a resolution plan had been approved for Íslandsbanki and thereby an MREL-Requirement for the Bank. The decision is based on the aforementioned MREL-Policy.

The MREL requirement is 21% of the Bank‘s Total Risk Exposure Amount (TREA) as per year-end of 2020 and applies from the date of the announcement. The Bank is considered to fulfil the MREL-Requirement from the outset.

It is anticipated that the MREL-Requirement will be updated in the third quarter of 2022.

The subordination requirement of Directive 2019/879/EU on Bank Recovery and Resolution (BRRD II) has not been defined, but the MREL-Policy states that the requirement will be published once BRRD II has been transposed into Icelandic law. In any event, in common with most European jurisdictions, it is likely that Icelandic banks will have to comply with MREL-requirements of BRRD II in January 2024.