As part of the implementation of the Bank Recovery and Resolution Directive (BRRD), Denmark has introduced a minimum requirement for own funds and eligible liabilities (MREL).
The purpose of the MREL requirement is to ensure that should the Nykredit Group fail, it can be recapitalised and restructured through a principal write-down or conversion of capital and debt instruments.
The requirement must generally be fulfilled using the Group's own funds and bail-inable senior debt. However, in May 2020 the Danish FSA introduced a maximum limit to the subordination requirement, which means that Nykredit may use ordinary senior debt to fulfil a small part of the requirement.
Bonds issued by Nykredit Realkredit may be included to meet the requirement, but they cannot at the same time count towards the debt buffer requirement.