“Forging Resilience” An Evaluation of the Transition Impact and Additionality of the EBRD’s MREL & Bail-in-able Products [2016-2023]

The introduction of MREL and bail-in-able products has created new opportunities for Multilateral Development Banks (MDBs), but it has also raised questions regarding the role MDBs should play in utilizing MREL and bail-in products to support their countries of operations.

Minimum-Requirement-for-Own-Fundsand-Eligible-Liabilities (MREL) instruments have become a key component in the capital structures of banks within the European Union, as a result of regulations set by the 2014 Bank Recovery and Resolution Directive (BRRD).

For the EBRD, MREL and bail-in products have rapidly become significant business; over the period covered by this evaluation, between 2016 and endSeptember 2023, the Bank invested in 95 separate MREL and bail-in instruments across 15 countries, with a total investment of EUR 3.1bn.

This evaluation responds to requests from Board Directors to better understand the role of the EBRD in the market for MREL and bail-in instruments, focusing specifically on the additionality and the EBRD’s contribution towards transition impact. It is the first evaluation of an MDB’s intervention in MREL and bail-in instruments. The evaluation draws upon an extensive portfolio analysis, case studies of the Bank’s investments in Romania, Jordan, and Poland, and wider contextual stocktaking of the market for MREL and bail-in instruments.

It is critical to understand how MREL and bail-in instruments may foster transition and drive systemic change.