Within the scope of the joint Financial Sector Assessment Program, conducted in Georgia in 2021, by the IMF and the World Bank, certain recommendations were made to the National Bank of Georgia. One of them is to establish the Minimum Requirement for Own Funds and Eligible Liabilities (MREL) for the domestic systemically important banks (D-SIBs) within the resolution framework of the National Bank of Georgia. The requirement represents a percentage derived from the ratio of eligible liabilities and capital instruments to total liabilities and regulatory capital.
It is noteworthy that the regulation developed based on the common practice envisaged by the framework of the European Bank Recovery and Resolution Directive (BRRD). The purpose of the regulation is to ex-ante create such a structure of balance sheets by systemic commercial banks, which will allow the National Bank, within its mandate, to effectively recapitalize the bank under resolution in crises by writing-off or conversion of liabilities.
The Minimum Requirement for Own Funds and Eligible Liabilities for systemic commercial banks is determined with the following amount and terms:
From 2024, systemic banks are required to submit monthly reports to the National Bank of Georgia in the attached form.