Senior non-preferred debt

Definition

Senior non-preferred debt is a statutory class of unsecured bank debt that ranks below ordinary senior liabilities but above subordinated instruments — created in 2017 so banks can meet subordinated MREL requirements without disturbing existing creditors.

Why the class was created

Bailing in ordinary senior debt is legally hazardous: it ranks alongside operational liabilities such as corporate deposits and derivatives, so imposing losses on it invites no-creditor-worse-off claims. France pioneered a contractual-statutory hybrid in 2016, and Directive (EU) 2017/2399 harmonised it across the EU: a layer of “non-preferred” senior claims that absorbs losses after own funds and subordinated debt but before any other senior liability.

The instrument

To qualify, instruments must have an original maturity of at least one year, no embedded derivative features, and contractual terms that state the non-preferred ranking expressly. In exchange, they are cleanly bail-inable and count towards subordinated MREL — which is why SNP issuance has become the workhorse of European MREL funding, visible across the “SNP” class in the instruments explorer.

Reading FIRDS data

Reported debt-seniority fields do not distinguish preferred from non-preferred senior debt, so this database classifies SNP instruments primarily from issue names and documentation conventions, and records the classification source on each instrument.