The National Bank of Serbia (“NBS”) adopted the new Decision on the Minimum Requirement for Capital and Eligible Liabilities of a Bank (“New MREL Decision”), as part of a package of new or amended bylaws following the latest amendments to the Law on Banks. The New MREL Decision shall replace the existing decision of the same name (“Existing MREL Decision”) and shall apply starting from 1 October 2025.
The New MREL Decision prescribes a more detailed set of rules relevant for complying with the minimum requirement for capital and eligible liabilities (MREL) by Serbian banks. Among others, the novelties include:
- changes to the conditions that eligible liabilities must satisfy in order to be included in the calculation of qualifying eligible liabilities;
- introduction of the rules on subordinated qualifying eligible liabilities, and of specific requirements for retail investors to invest in such liabilities;
- prior notification to the NBS before including an eligible liability in the calculation of qualifying eligible liabilities (with one limited exception), with the submission of the relevant documentation, based on which the NBS assesses within 60 days whether the prescribed conditions are met and notifies the bank of such assessment; and
- prior approval of the NBS for reducing, redeeming or repaying qualifying eligible liabilities before the agreed maturity.
In terms of the treatment of eligible liabilities included in the calculation of qualifying eligible liabilities under the Existing MREL Decision, banks are required to review the fulfilment of conditions for including such liabilities in the calculation of qualifying eligible liabilities under the New MREL Decision by 1 October 2025.
Eligible liabilities which do not fulfil the conditions of the New MREL Decision, but which fulfilled the conditions under the Existing MREL Decision before 1 October 2025, may be included in the calculation of qualifying eligible liabilities until 31 December 2025. Starting from 1 January 2026, such eligible liabilities may be included in the qualifying eligible liabilities until 1 January 2030 at the latest, in the following manner:
- until 31 December 2026, up to 80% of the amount of qualifying eligible liabilities;
- until 31 December 2027, up to 60% of the amount of qualifying eligible liabilities;
- until 31 December 2028, up to 40% of the amount of qualifying eligible liabilities; and
- until 31 December 2029, up to 20% of the amount of qualifying eligible liabilities.
The banks are required to gradually meet the determined capital and eligible liabilities requirement, with the milestones falling on 31 December of 2026, 2027, 2028 and 2029.
Together with the New MREL Decision, a set of new decisions or amendments to the existing decisions concerning banks’ resolution and reporting was adopted, including the new Decision on Detailed Terms of Write-Off and Conversion of Elements of Capital and Eligible Liabilities of a Bank, which shall also apply as of 1 October 2025.
The adoption of the New MREL Decision marks a significant step toward aligning the Serbian regulatory framework with evolving international standards on bank resolution and financial stability. Banks are now expected to carefully assess their current capital and liability structures and take timely action to ensure full compliance with the new requirements by the applicable deadlines.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Maja Jovancevic Setka, Partner, and Dimitrije Ilic, Senior Associate, Karanovic & Partners
