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The Bank Recovery and Resolution (No. 2) Order 2014

Type Statutory-Instrument

Publication 2014-12-18

Last updated 2026-01-01

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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Made: 18th December 2014

Laid before Parliament: 19th December 2014

Coming into force in accordance with article 1(2) and (3)

The Treasury make the following Order in exercise of the powers conferred by section 2(2) of the European Communities Act 1972 , section 192B(4) of the Financial Services and Markets Act 2000 and section 230 of the Banking Act 2009 .

The Treasury are designated for the purposes of the European Communities Act 1972 in relation to financial services.

PART 1 — Introductory provisions

Citation and commencement

1

(1) This Order may be cited as the Bank Recovery and Resolution (No. 2) Order 2014.

(2) This Order, except Part 9, comes into force on 10th January 2015.

(3) Part 9 of this Order comes into force on 1st January 2016.

Interpretation

2

(1) In this Order, except where provision is made to the contrary—

“appropriate regulator”—in relation to an institution which is not part of a group subject to supervision on a consolidated basis in accordance with the capital requirements regulation and CRR rules—if the institution is a PRA-authorised person, means the PRA;if the institution is any other UK authorised person, means the FCA;in relation to a relevant group—where the PRA is the consolidating supervisor, means the PRA;where the FCA is the consolidating supervisor, means the FCA;where neither the PRA nor the FCA is the consolidating supervisor, means the PRA in relation to a PRA-authorised person and the FCA in relation to any other UK authorised person;

“the Bank” means the Bank of England acting otherwise than in its capacity as the Prudential Regulation Authority;

“the capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26th June 2013 on access to the activity of credit institutions and the prudential supervisions of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC ;

“the capital requirements regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;

“competent authority” means the supervisor of an authorised person under FSMA;

“conditions for early intervention” means where—an institution infringes the requirements of—the capital requirements regulation or CRR rules;legislation upon which the United Kingdom relied immediately before IP completion day to meet its obligations with respect to the capital requirements directive;legislation upon which the United Kingdom so relied to meet its obligations with respect to Title II of Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments; orany of Articles 3 to 7, 14 to 17 and 24 to 26 of Regulation (EU) No. 600/2014 of 15th May 2014 of the European Parliament and of the Council on Markets in Financial Instruments , or rules made under them; oran institution is likely in the near future to infringe those requirements due, amongst other things, to—a rapidly deteriorating financial condition, including deteriorating liquidity situation;increasing level of leverage;non-performing loans; or concentrations of exposures, as assessed on the basis of a set of triggers, which may include the institution's own funds requirement plus 1.5 percentage points;

“conditions for resolution”—in relation to an institution authorised by the PRA or FCA, means the conditions for the exercise of stabilisation powers in section 7 of the Banking Act 2009 (general conditions for exercise of stabilisation powers);in relation to an undertaking set up in the United Kingdom, other than an institution, means the conditions for the exercise of stabilisation powers in section 81B (groups: sale to commercial purchaser and transfer to bridge bank), section 81ZBA (transfer to asset management vehicle) or section 81BA (groups: bail-in option) of the Banking Act 2009 ; ......;

“the consolidating supervisor” has the meaning given in section 6A(9) of the Banking Act 2009;

“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for an institution or for a group of which an institution forms part;

“credit institution” has the meaning given in section 48D(1) of the Banking Act 2009;

“critical functions”—... has the meaning given in section 3 of the Banking Act 2009 (interpretation: other expressions); ......;

“CRR rules” has the meaning given in section 144A of FSMA;

“deposit” has the meaning given in Article 2(1)(23A) of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15th May 2014 on markets in financial instruments and amending Regulation (EU) No. 648/2012;

“depositor” means the holder or, in the case of a joint account, each of the holders, of a deposit;

“derivative contract” has the meaning given by point (5) of Article 2 of Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories ;

“eligible liabilities”—... has the meaning given in section 3(1) of the Banking Act 2009; ......

“extraordinary public financial support” has the meaning given in section 3(1) of the Banking Act 2009;

“the FCA” means the Financial Conduct Authority”;

“financial holding company” has the meaning given by point (20) of Article 4.1 of the capital requirements regulation;

“financial institution”, except in Part 18, has the meaning given by point (26) of Article 4.1 of the capital requirements regulation;

“Financial Policy Committee” means the Financial Policy Committee of the Bank established by section 9B of the Bank of England Act 1998 ;

“FSMA” means the Financial Services and Markets Act 2000;

“group” means a parent undertaking and its subsidiaries;

“group entity”, in relation to a relevant group, means the UK parent undertaking or a group subsidiary;

“group recovery plan” means a document which provides for measures to be taken in relation to a relevant group to achieve the stabilisation of the group as a whole, or of any institution within the group, where the group or the institution is in a situation of financial stress, in order to address or remove the causes of the financial stress and restore the financial position of the group or institution;

“group resolution plan”, in relation to a relevant group, means a document which identifies at least one resolution entity and at least one resolution group and which makes provision for— applying the resolution tools or exercising resolution powers in respect of each resolution entity in the relevant group;co-ordinating the application of resolution tools and the exercise of resolution powers by resolution authorities in respect of group entities that meet the conditions for resolution;

“group subsidiary”, in relation to a relevant group, means a subsidiary within that group which is an institution, a financial institution, a financial holding company or a mixed financial holding company;

“insolvency proceedings” includes—proceedings under the Insolvency Act 1986 ; andthe procedure in Part 2 of the Banking Act 2009 (bank insolvency) and in Part 3 of that Act (bank administration);

“institution” means a credit institution or an investment firm;

“instruments of ownership” means—shares,other instruments that confer ownership,instruments that are convertible into, or give the right to acquire, shares or other instruments of ownership, andinstruments representing interests in shares or other instruments of ownership;

“investment firm” has the meaning given in section 258A of the Banking Act 2009

“management body” has the meaning given in point (9) of Article 4.1 of the capital requirements regulation;

“mixed activity holding company” has the meaning given by point (22) of Article 4.1 of the capital requirements regulation;

“mixed financial holding company” has the meaning given by point (21) of Article 4.1 of the capital requirements regulation;

“own funds” has the meaning given by point (118) of Article 4.1 of the capital requirements regulation;

“parent undertaking” has the meaning given by point (15)(a) of Article 4.1 of the capital requirements regulation;

“the PRA” means the Prudential Regulation Authority;

“PRA-authorised person” means a UK authorised person which is a PRA-authorised person within the meaning given by section 2B(5) of FSMA (the PRA's general objective);

“the recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No. 1093/2010 and (EU) No. 648/2012, of the European Parliament and of the Council as last amended by Directive (EU) 2019/879 of the European Parliament and of the Council of 20th May 2019;

“recovery plan” means a document which provides for measures to be taken by an institution authorised by the PRA or FCA which is not part of a group, following a significant deterioration of the financial position of the institution, in order to restore its financial position;

“relevant group” means the group constituted by an UK parent undertaking and its subsidiaries;

“resolution entity” means an entity that is identified in a resolution plan or a group resolution plan as an entity in respect of which resolution action might be taken;

“resolution group” means a resolution entity together with any subsidiary where the subsidiary—is not a resolution entity itself;is not a subsidiary of another resolution entity; oris established in a third country and is stated by the group resolution plan under Part 5 to be included in the resolution group;

“resolution objectives”, in relation to the application of resolution tools or the exercise of resolution powers—... means the special resolution objectives set out in section 4 of the Banking Act 2009 ;

“resolution plan” means a document which makes provision relating to the resolution action to be taken in the event that an institution or other person meets the conditions for resolution;

“resolution powers” means the powers of the Bank under Part 1 of the Banking Act 2009 other than those exercised in applying the resolution tools;

“resolution tools”—... means stabilisation options referred to in paragraphs (a), (b), (ba) and (c) of section 1(3) of the Banking Act 2009 (overview: special resolution regime);

“shareholders” means shareholders or holders of other instruments of ownership;

“subsidiary” has the meaning given by point (16) of Article 4.1 of the capital requirements regulation;

“third country” means a country or territory other than the United Kingdom;

“UK authorised person” means an authorised person (within the meaning given in section 31 of FSMA ) which is incorporated in, or formed under the law of, any part of the United Kingdom;

“UK parent financial holding company” has the meaning given in point (30) of Article 4.1 of the capital requirements regulation;

“UK parent institution” has the meaning given in point (28) of Article 4.1 of the capital requirements regulation;

“UK parent mixed financial holding company” has the meaning given in point (32) of Article 4.1 of the capital requirements regulation;

“UK parent undertaking” means a UK parent institution, UK parent financial holding company or UK parent mixed financial holding company.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In this Order any reference, in relation to a company, undertaking, subsidiary or other entity, to the country or territory in which the entity is set up is a reference to—

(a) the country or territory (as the case may be) in which the entity is authorised by an authority which, in the country or territory concerned, exercises any function equivalent to a function of the appropriate regulator; or

(b) if the entity is not authorised by such an authority, the country or territory in which the entity is incorporated or under whose law (including the law of any part of that country or territory) the entity is formed.

(4) In this Order any reference to an EU regulation within the meaning of the European Union (Withdrawal) Act 2018 is to be read as a reference to the instrument as it forms part of assimilated law.

Application of Order

3

This Order imposes on the Bank (designated as the resolution authority in the United Kingdom), the PRA and the FCA (designated as appropriate regulators in the United Kingdom) procedural and other requirements with respect to planning and taking measures for the purpose of—

(a) restoring the financial position of—

(i) institutions;

(ii) relevant groups; and

(iii) in relation to relevant groups, specified kinds of parent undertaking and subsidiary (other than institutions); and

(b) applying the resolution tools and exercising the resolution powers in order to achieve one or more of the resolution objectives in relation to such institutions, groups and undertakings.

PART 2 — Designation of authorities and competent ministry

Designation of the Bank as resolution authority

4

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Designation for the purposes of Article 59 of the recovery and resolution directive

5

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Designation of the Treasury as the ministry responsible for exercising the functions of the competent ministry

6

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PART 3 — Recovery and resolution planning

Recovery planning: preparatory steps and simplified obligations

7

(1) For each institution in relation to which Chapter 1 of Part 4 applies the appropriate regulator must determine the date by which the institution is required to draw up a recovery plan.

(2) For each relevant group in relation to which Chapter 2 of Part 4 applies the appropriate regulator must determine the date by which a group recovery plan is to be drawn up.

(3) The appropriate regulator may determine—

(a) that specified information in addition to the information set out in Schedule A1 is to be included in a recovery plan or group recovery plan; or

(b) that any information set out in that Schedule or other detail which would otherwise have to be included in a recovery plan or group recovery plan does not have to be included.

(3A) The PRA may make technical standards specifying further information to be contained in a recovery plan or a group recovery plan that is to be drawn up by an institution or group entity that is authorised by the PRA.

(3B) The FCA may make technical standards specifying further information to be contained in a recovery plan or a group recovery plan that is to be drawn up by an institution or group entity that is authorised by the FCA.

(4) The appropriate regulator may determine that a plan drawn up by an institution or a UK parent undertaking is to be reviewed at intervals of more than one year.

(4A) The Bank may make technical standards specifying relevant criteria which the appropriate regulator must take into account when exercising its functions under this article.

(4B) In paragraph (4A) “relevant criteria” means criteria that may be used to assess the impact that an institution's failure would have on financial markets, other institutions and on funding conditions.

Resolution planning: preparatory steps and simplified obligations

8

(1) For each institution in relation to which Chapter 1 of Part 5 applies the Bank must determine the date by which it aims to draw up a resolution plan.

(2) For each relevant group in relation to which Chapter 2 of Part 5 applies the Bank must determine the date by which it aims to draw up a group resolution plan.

(3) The Bank may determine—

(a) that specified information in addition to the information set out in Schedule 1, in the case of a resolution plan, or Schedule 2, in the case of a group resolution plan, including any of the additional information specified in Schedule 2A, is to be provided for the purpose of drawing up the plan; or

(b) that a resolution plan does not need to contain all of the information set out in Schedule 1, or that a group resolution plan does not need to contain all of the information set out in Schedule 2.

(3A) The Bank may make technical standards specifying relevant criteria which it must take into account when exercising its functions under this article.

(3B) In paragraph (3A) “relevant criteria” means criteria that may be used to assess the impact that an institution's failure would have on financial markets, other institutions and on funding conditions.

(4) For the purpose of making an assessment of resolvability (within the meaning given in Chapter 1 of Part 6) or an assessment of group resolvability (within the meaning given in Chapter 2 of Part 6), the Bank may determine that it will—

(a) consider specified matters in addition to the matters provided for in Schedule 2B; or

(b) make the assessment at a lower level of detail than would otherwise be required by article 60(2) or 62(3).

(5) The Bank may determine that it will review a resolution plan or group resolution plan at intervals of more than one year.

Consultation with the Financial Policy Committee

9

(1) The PRA and the FCA must consult the Financial Policy Committee (“the Committee”) before adopting a general policy on the imposition of simplified obligations in respect of any class of undertaking if the policy would, in the opinion of the PRA or FCA, have a material adverse impact on the advancement by the Committee of any of the Committee's objectives under section 9C of the Bank of England Act 1998 .

(2) The Bank must consult the Committee before adopting a general policy on the imposition of simplified obligations in respect of any class of undertaking if the policy would, in the Bank's opinion, have a material adverse impact on the advancement by the Committee of any of the Committee's objectives under section 9C of the Bank of England Act 1998.

(3) In this article “simplified obligations”—

(a) in relation to the PRA or FCA, means the less onerous obligations that would result from a determination under article 7(3)(b) or (4);

(b) in relation to the Bank, means the less onerous obligations that would result from a determination under article 8(3)(b), (4)(b) or (5).

Provision of information to EBA

10

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PART 4 — Recovery plans

CHAPTER 1 — Assessment of recovery plan drawn up by an institution

Application and interpretation of Chapter 1

11

(1) This Chapter applies where an institution—

(a) is authorised by the PRA or FCA and is not part of a group subject to supervision on a consolidated basis in accordance with the capital requirements regulation and CRR rules; and

(b) submits a recovery plan to the appropriate regulator for assessment ....

(2) In this Chapter “relevant measures” means measures to maintain or restore the viability and financial position of the institution, including measures to—

(a) reduce its risk profile, including its liquidity risk profile;

(b) review its structure and strategy;

(d) change its funding strategy in order to improve the resilience of core business lines and critical functions; and

(e) change its governance structure.

Assessment of plan

12

(1) The appropriate regulator must assess the recovery plan within six months beginning with the date on which it receives the plan.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The appropriate regulator must—

(a) send a copy of the recovery plan to the Bank; and

(b) have regard to any recommendations made by the Bank to address any course of action proposed in the plan which could have an adverse impact on the resolvability of the institution.

Criteria for assessment

13

(1) The appropriate regulator must assess whether the recovery plan meets the requirements of Schedule A1 and whether the arrangements proposed in the plan—

(a) would, if implemented, be reasonably likely to maintain or restore the viability and financial position of the institution; and

(b) would be reasonably likely to be implemented quickly and effectively in situations of financial stress and, as far as possible, without any material adverse impact on the financial system of the United Kingdom.

(1A) The PRA and the FCA may each make technical standards relating to the criteria referred to in paragraph (1) for a recovery plan submitted by an institution that it has authorised.

(2) In assessing the recovery plan against these criteria, the appropriate regulator must consider—

(a) any preparatory measures taken or planned to be taken by the institution;

(b) the possibility that the plan may have to be implemented at the same time as recovery plans drawn up by other institutions and group recovery plans; and

(c) whether the capital and funding structure of the institution is appropriate having regard to the level of complexity of its organisational structure and its risk profile.

(3) This article has effect subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(a)) with respect to the recovery plan.

Revision of plan

14

(1) The appropriate regulator—

(a) must notify the institution if, in its assessment, the recovery plan contains any material deficiency or measure which would impede its implementation; and

(b) may not require the institution to revise the recovery plan without giving it an opportunity to state its opinion on that requirement.

(2) If the appropriate regulator requires the institution to revise the recovery plan, it must allow the institution two months, which it may on application by the institution extend to three months, to prepare a plan which demonstrates that the deficiency or other impediment has been addressed.

Business changes and relevant measures

15

(1) This article applies where—

(a) the institution fails to submit a revision of the recovery plan within the time allowed by the appropriate regulator; or

(b) the appropriate regulator considers that a matter notified under article 14(1) has not been adequately addressed in a revision of the plan and cannot be adequately addressed by directing the institution to make specific changes to the plan.

(2) The appropriate regulator must, in exercise of its powers under FSMA—

(a) direct the institution to propose changes to its business which would be made with the object of addressing a material deficiency or measure in the recovery plan which would impede its implementation; and

(b) if the institution fails to propose such changes to its business within the time allowed by the appropriate regulator or the appropriate regulator considers that any changes proposed would not adequately address the impediment, determine whether to direct the institution to take relevant measures.

CHAPTER 2 — Assessment of group recovery plan where the PRA or FCA is the consolidating supervisor

Application and interpretation of Chapter 2

16

(1) This Chapter applies where, in relation to a relevant group—

(a) the PRA or FCA is the consolidating supervisor; and

(b) a group entity submits a group recovery plan to the appropriate regulator for assessment ....

(2) In this Chapter—

“business changes” means changes to the business of a group institution which would be made with the object of addressing an impediment;

“four month period” means four months beginning with the date on which the appropriate regulator transmits a copy of the group recovery plan under article 17;

“group institution” means—the UK parent undertaking, if it is an institution;a group subsidiary which is an institution;

“impediment”, in relation to the group recovery plan, means any material deficiency or measure in the plan which would impede its implementation;

“relevant matters”, in relation to the assessment of the group recovery plan, means the following matters for decision—whether the plan meets the criteria for assessment;whether group institutions should be required to draw up and submit recovery plans on an individual basis;whether the plan contains an impediment;whether a group entity should be required to revise the plan;whether an impediment has been adequately addressed in a revision of the plan;where an impediment has not been adequately addressed in a revision of the plan, whether it can be adequately addressed by directing a group entity to make specific changes to the plan; andwhere an impediment cannot be adequately addressed by specific changes to the plan or by business changes—whether a group entity should be directed to take relevant measures; andthe terms of any direction to take relevant measures;

“relevant measures” means measures to maintain or restore the viability and financial position of a group institution, including measures to—reduce the institution's risk profile, including its liquidity risk profile;review its structure and strategy;enable it to undertake timely recapitalisation;change its funding strategy in order to improve the resilience of core business lines and critical functions; orchange its governance structure; and

Duty to transmit a copy of group recovery plan

17

(1) The appropriate regulator must send a copy of the group recovery plan or, where paragraph (2) has effect in relation to any information, of the plan without that information, to—

(a) the Bank; and

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) the PRA or FCA, where either is not the appropriate regulator but supervises a group entity as an authorised person under FSMA.

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) This article does not require any information contained in the group recovery plan to be disclosed if its disclosure would be contrary to section 348 of FSMA (restrictions on disclosure of confidential information by FCA, PRA etc).

Assessment of group recovery plan

18

(1) ... The appropriate regulator must assess the group recovery plan, and is solely responsible for the assessment.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) The assessment must take account of—

(a) any recommendations made by the Bank ... to address any course of action proposed in the plan which could have an adverse impact on the resolvability of a group institution; and

(b) the potential impact of the proposed recovery measures on the financial stability of the United Kingdom.

Purpose of assessment

19

(1) The purpose of the assessment of the group recovery plan is to determine whether the plan meets the criteria for assessment and decide other relevant matters.

(2) The criteria for assessment are that the plan must satisfy the requirements of Schedule A1 and that the arrangements proposed in the plan—

(a) would, if implemented, be reasonably likely to maintain or restore the viability and financial position of group institutions; and

(b) would be reasonably likely to be implemented quickly and effectively in situations of financial stress and, as far as possible, without any material adverse impact on the financial system of the United Kingdom.

(2A) The PRA and the FCA may each make technical standards relating to the criteria referred to in paragraph (1) for a group recovery plan submitted by a group entity that it has authorised.

(3) The appropriate regulator must ensure that the group recovery plan is not assessed without consideration of—

(a) any preparatory measures taken or planned to be taken by any group entity;

(b) the possibility that the plan may have to be implemented at the same time as other group recovery plans and recovery plans drawn up by institutions; and

(c) whether the capital and funding structure of the group institutions is appropriate having regard to the level of complexity of their organisational structure and risk profile.

(4) This article has effect subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(a)) with respect to the group recovery plan.

Assessment of plan where every group institution is a UK authorised person

20

The appropriate regulator must conclude the assessment within the four month period.

Joint assessment of plan

21

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Revision of plan

22

The appropriate regulator—

(a) must notify a UK parent undertaking if the group recovery plan is found on assessment to contain an impediment; and

(b) may not require a UK parent undertaking to revise the plan without giving it an opportunity to state its opinion on that requirement.

(2) If the appropriate regulator requires a UK parent undertaking to revise the plan, it must allow the undertaking two months, which it may on application by the undertaking extend to three months, to prepare a plan which demonstrates that the impediment has been addressed.

Business changes and relevant measures

23

(1) This article applies where—

(a) a UK parent undertaking fails to submit a revision of the group recovery plan within the time allowed by the appropriate regulator; or

(b) the appropriate regulator considers that an impediment has not been adequately addressed in a revision of the plan and cannot be adequately addressed by directing the UK parent undertaking to make specific changes to the plan.

(2) ... the appropriate regulator must, in exercise of its powers under FSMA—

(a) direct the UK parent undertaking to propose business changes; and

(b) if the UK parent undertaking fails to propose business changes within the time allowed by the appropriate regulator or the appropriate regulator considers that any business changes proposed by the UK parent undertaking would not adequately address the impediment, determine whether to direct the UK parent undertaking to take relevant measures.

Recovery plan for group institution

24

Where the appropriate regulator requires a group institution to draw up and submit a recovery plan on an individual basis, Chapter 1 applies for the purpose of the assessment of the plan, but has effect for that purpose as if each reference to an institution were a reference to the group institution.

References to EBA

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Requesting the assistance of EBA

26

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CHAPTER 3 — Assessment of group recovery plan where neither the PRA nor the FCA is the consolidating supervisor

Application and interpretation of Chapter 3

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Purpose of assessment

28

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Joint assessment of plan

29

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Assessment of recovery plans drawn up on an individual basis

30

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References to EBA

31

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Requesting the assistance of EBA

32

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CHAPTER 4 — Review of recovery plans and group recovery plans

Review of recovery plan

33

(1) This article applies where a recovery plan drawn up by an institution has been assessed under Chapter 1, including that Chapter as applied by article 24 ....

(2) The appropriate regulator must require the institution to review the recovery plan and make any appropriate amendment at least—

(a) once a year; or

(b) if the appropriate regulator has made a determination under article 7(4), at the intervals determined.

(3) The appropriate regulator must require the institution to—

(a) review the recovery plan where any material change has been made to the legal or organisational structure of the institution or to its business or financial position; and

(b) make appropriate amendments if such a change could have a material impact on the effectiveness of the plan or necessitate amendment for any other reason.

(4) Where the appropriate regulator considers that the plan ought to be reassessed following a decision ... to prohibit or restrict the provision of financial support under an authorised agreement (within the meaning given in Chapter 4 of Part 7), it may require the institution to review the recovery plan and make any appropriate amendment.

(5) For the purposes of any review of the recovery plan the appropriate regulator may make a determination under article 7(3).

(6) Where the institution submits an up-dated plan for assessment, the appropriate regulator must assess that plan—

(a) if the institution ... is not part of a group subject to supervision on a consolidated basis in accordance with the capital requirements regulation and CRR rules, in accordance with Chapter 1; or

(b) if the institution is a group institution within the meaning given in Chapter 2 ..., in accordance with Chapter 1 as applied by article 24 ....

(7) For the purposes of this article Part 3 and Chapter 1 have effect with the modifications specified in the table—

Article	Modification
Article 7	In paragraph (3) the reference to a recovery plan is a reference to the up-dated plan.
Article 11	Ignore paragraph (1).
Articles 12 to 15	Each reference to the recovery plan (but not the reference to recovery plans in article 13(2)(b)) is a reference to the up-dated plan.

(8) In this article “up-dated plan” means the recovery plan after it has been reviewed pursuant to this article (whether or not it has been amended on review).

Review of group recovery plan assessed under Chapter 2

34

(1) This article applies where, in relation to a relevant group, a group recovery plan has been assessed under Chapter 2.

(2) The appropriate regulator must require a UK parent undertaking to review the plan and make any appropriate amendment at least—

(a) once a year; or

(b) if the appropriate regulator has made a determination under article 7(4), at the intervals determined.

(3) The appropriate regulator must require a UK parent undertaking to—

(a) review the plan where any material change has been made to the legal or organisational structure of the relevant group or any group entity or to its business or financial position; and

(b) make appropriate amendments if such a change could have a material impact on the effectiveness of the plan or necessitate amendment for any other reason.

(4) Where the appropriate regulator considers that the plan ought to be reassessed following a decision ... to prohibit or restrict the provision of financial support under an authorised agreement (within the meaning given in Chapter 4 of Part 7), it may require a UK parent undertaking to review the plan and make any appropriate amendment.

(5) For the purposes of any review of the plan the appropriate regulator may make a determination under article 7(3).

(6) Where a group entity submits an up-dated plan for assessment, the appropriate regulator must assess that plan in accordance with Chapter 2.

(7) For the purposes of this article Part 3 and Chapter 2 have effect with the modifications specified in the table—

Article	Modification
Article 7	In paragraph (3) the reference to a group recovery plan is a reference to the up-dated plan.
Article 16	Ignore paragraph (1).
Articles 16 to 23, 25 and 26	Each reference to the group recovery plan is a reference to the up-dated plan.

(8) In this article—

“up-dated plan” means the group recovery plan after it has been reviewed pursuant to this article (whether or not it has been amended on review).

Review of group recovery plan assessed under Chapter 3

35

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 5 — Resolution plans

CHAPTER 1 — Resolution plans for institutions

Interpretation of Chapter 1

36

In this Chapter “relevant institution” means an institution which is authorised by the PRA or FCA and is not part of a group subject to supervision on a consolidated basis in accordance with the capital requirements regulation and CRR rules.

The Bank's duty to draw up resolution plans

37

(1) The Bank must draw up and adopt a resolution plan for each relevant institution.

(2) Subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(b)) with respect to a resolution plan, the plan must—

(a) contain the information, and be drawn up with regard to the considerations, set out in Schedule 1; and

(b) contain information specified in any technical standards made under paragraph (2A).

(2A) The Bank may make technical standards relating to information to be contained in the resolution plan for a relevant institution.

(3) The resolution plan must be drawn up on the basis of the information provided for that purpose by the relevant institution or the appropriate regulator and any other relevant information.

(3A) The Bank may make technical standards relating to—

(a) the procedures for the provision of information by the relevant institution or the appropriate regulator under paragraph (3); and

(b) a minimum set of standard forms and templates for such provision of information.

(4) For the purpose of drawing up a resolution plan the Bank must consult—

(a) the appropriate regulator; ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The Bank must provide the relevant institution with a summary of the key elements of the resolution plan.

Duty to transmit a copy of the resolution plan

38

The Bank must send a copy of the resolution plan adopted for a relevant institution to the appropriate regulator.

CHAPTER 2 — Group resolution plan where the PRA or FCA is the consolidating supervisor

Application of Chapter 2

39

This Chapter applies where the PRA or FCA is the consolidating supervisor in relation to a relevant group.

The Bank's duty to draw up group resolution plans

40

(1) ... The Bank must draw up and adopt a group resolution plan, and is solely responsible for the plan.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(b)) with respect to a group resolution plan, the plan must—

(a) contain the information, and be drawn up with regard to the considerations, set out in Schedule 2; and

(b) contain information specified in any technical standards made under paragraph (3A).

(3A) Taking into account the diversity of business models of groups in the United Kingdom, the Bank may make technical standards relating to information to be contained in the group resolution plan.

(4) The resolution plan must be drawn up on the basis of—

(a) the information provided for that purpose by a group entity set up in the United Kingdom or by the appropriate regulator; and

(b) any other relevant information.

(4A) The Bank may make technical standards relating to—

(a) the procedures for the provision of information under paragraph (4)(a); and

(b) a minimum set of standard forms and templates for such provision of information.

(5) For the purpose of drawing up a group resolution plan, the Bank must consult—

(a) the appropriate regulator;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) A group resolution plan must not have a disproportionate impact on the United Kingdom.

(6A) In a relevant group, where a mixed-activity holding company has at least one subsidiary which is—

(a) an institution; and

(b) a subsidiary of a financial holding company,

the group resolution plan shall provide that the financial holding company is identified as a resolution entity. “Institution” in this subsection has the same meaning as in the capital requirements regulation.

(7) For the purpose of drawing up a group resolution plan, so far as the plan is relevant to—

(a) a subsidiary within the relevant group which is set up in a third country, or

(b) an institution within the relevant group which has a significant branch in a third country,

the Bank may consult the authorities which, in the country concerned, exercise any function equivalent to a function of the Bank under Part 1 of the Banking Act 2009 or the PRA or the FCA under FSMA.

(8) In paragraph (7)—

“branch” has the meaning given in point (17) of Article 4.1 of the capital requirements regulation; and

“significant branch” shall be construed with regard, in particular, to the following—whether the market share of the branch in terms of deposits exceeds 2% in the third country;the likely impact of a suspension or closure of the operations of the institution on systemic liquidity and the payment, clearing and settlement systems in the third country;the size and importance of the branch in terms of number of clients within the context of the banking or financial system of the third country.

Information to be transmitted for the purpose of drawing up group resolution plans

41

(1) For the purposes of drawing up and adopting a group resolution plan the Bank must send relevant information to the appropriate regulator—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) This article does not require any information to be disclosed if its disclosure would be contrary to section 348 of FSMA as applied for the purposes of Part 1 of the Banking Act 2009 (with modifications) by section 89L of that Act (restrictions on disclosure of confidential information).

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Joint decision on adoption of group resolution plan

42

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA

43

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA

44

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty to transmit a copy of the group resolution plan

45

The Bank must send a copy of the group resolution plan to the appropriate regulator ....

CHAPTER 3 — Group resolution plan where neither the PRA nor the FCA is the consolidating supervisor

Application and interpretation of Chapter 3

46

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Joint decision on adoption of group resolution plan

47

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to reach joint decision: disagreement by the Bank with a joint proposal

48

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to reach joint decision: agreement by the Bank with a joint proposal

49

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Resolution plan for group entity

50

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA

51

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA

52

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 4 — Review of resolution plans and group resolution plans

Review of resolution plan

53

(1) The Bank must review a resolution plan and make any appropriate amendment at least—

(a) once a year; or

(b) if the Bank has made a determination under article 8(5), at the intervals determined.

(2) The Bank must—

(a) review a resolution plan where—

(i) any material change has been made to the legal or organisational structure of the relevant entity or to its business or financial position; or

(ii) a change results from the application of the resolution tools or the exercise of the powers under section 6B of the Banking Act 2009 in relation to the relevant entity.

(b) make appropriate amendments if such a change could have a material impact on the effectiveness of the plan or necessitate amendment for any other reason.

(3) For the purposes of a review of a resolution plan the Bank may make a determination under article 8(3).

(4) The Bank must review a resolution plan and adopt the up-dated plan—

(a) in the case of an institution which is authorised by the PRA or FCA and is not part of a group subject to supervision on a consolidated basis in accordance with the capital requirements regulation and CRR rules, in accordance with Chapter 1; ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) For the purposes of this article Part 3 and Chapter 1 have effect with the modifications specified in the table—

Article	Modification
Article 8	In paragraph (3) the reference to a resolution plan is a reference to the up-dated plan.
Article 37	Ignore paragraph (1).In paragraph (2)—the reference to a resolution plan is a reference to the up-dated plan; andfor “be drawn up” read “the review must be undertaken”.In paragraph (3) for “drawn up” read “reviewed”.In paragraph (4) for “drawing up” read “reviewing”.In paragraph (5) the reference to the resolution plan is a reference to the up-dated plan.
Article 38	The reference to the resolution plan is a reference to the up-dated plan.

(6) In this article—

“relevant entity” means an institution or group entity for which the Bank has adopted a resolution plan;

“resolution plan” means a plan adopted by the Bank under Chapter 1...; and

“up-dated plan”, in relation to a resolution plan, means that plan as reviewed in accordance with this article (whether or not it has been amended on review).

Review of group resolution plan drawn up by the Bank

54

(1) The Bank must review a group resolution plan at least—

(a) once a year; or

(b) if the Bank has made a determination under article 8(5), at the intervals determined.

(2) The Bank must—

(a) review a group resolution plan where any material change has been made to the legal or organisational structure of the relevant group or any group entity or to its business or financial position; and

(b) make appropriate amendments if such a change could have a material impact on the effectiveness of the plan or necessitate amendment for any other reason.

(3) For the purposes of a review of a group resolution plan the Bank may make a determination under article 8(3).

(4) The Bank must review a group resolution plan and adopt the up-dated plan in accordance with Chapter 2.

(5) For the purposes of this article Part 3 and Chapter 2 have effect with the modifications specified in the table—

Article	Modification
Article 8	In paragraph (3) the reference to a group resolution plan is a reference to the up-dated plan.
Article 40	In paragraphs (1) and (2) for “draw up and adopt a” read “review the”.In paragraph (3)—the reference to a group resolution plan is a reference to the up-dated plan; andfor “be drawn up” read “the review must be undertaken”.In paragraph (4) for “drawn up” read “reviewed”.In paragraphs (5) and (7) for “drawing up a” read “reviewing the”.
Article 41	...
Article 45	The reference to a group resolution plan is a reference to the up-dated plan.

(6) In this article—

“group resolution plan” means a plan adopted by the Bank under Chapter 2; and

“up-dated plan”, in relation to a group resolution plan, means that plan as reviewed in accordance with this article (whether or not it has been amended on review).

Review of group resolution plan drawn up by another resolution authority

55

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 5 — Information and records for resolution planning

Information required for resolution planning

56

(1) The regulator must provide the Bank with all information contained in a resolution pack prepared by a relevant person in accordance with rules made by the regulator under FSMA.

(2) This article does not require any information to be disclosed if its disclosure would be contrary to section 348 of FSMA.

(3) In this article—

“regulator” has the meaning given in section 3A(2) of FSMA ;

“relevant person” has the meaning given in subsection (2) of section 137K of FSMA (rules about resolution packs: duty to consult); and

“resolution pack” has the meaning given in subsection (3) of that section.

Notice of matters which could necessitate an amendment of a plan

57

The PRA and the FCA must notify the Bank without delay of any change of circumstances or other matter coming to their attention which could necessitate an amendment of a resolution plan or group resolution plan.

Records of financial contracts

58

(1) The Bank may give directions to a relevant person in relation to maintaining detailed records of financial contracts to which the relevant person is a party.

(2) A “relevant person” is—

(a) an institution authorised by the PRA or FCA; or

(b) an undertaking set up in the United Kingdom which is a subsidiary of an institution authorised by the PRA or FCA ...; or

(2A) “Financial contracts” means—

(a) securities contracts, including—

(i) contracts for the purchase, sale or loan of a security, a group or index of securities;

(ii) options on a security or group or index of securities;

(iii) repurchase or reverse repurchase transactions on any such security, group or index;

(b) commodities contracts, including—

(i) contracts for the purchase, sale or loan of a commodity or group or index of commodities for future delivery;

(ii) options on a commodity or group or index of commodities;

(iii) repurchase or reverse repurchase transactions on any such commodity, group or index;

(c) futures and forwards contracts, including contracts (other than a commodities contract) for the purchase, sale or transfer of a commodity or property of any other description, service, right or interest for a specified price at a future date;

(d) swap agreements, including—

(i) swaps and options relating to interest rates, spot or other foreign exchange agreements, currency, an equity index or equity, a debt index or debt, commodity indexes or commodities, weather, emissions or inflation;

(ii) total return, credit spread or credit swaps;

(iii) any agreements or transactions that are similar to an agreement referred to in paragraph (i) or (ii) which is the subject of recurrent dealing in the swaps or derivatives markets;

(e) inter-bank borrowing agreements where the term of the borrowing is three months or less;

(f) master agreements for any of the contracts or agreements referred to in sub-paragraphs (a) to (e).

(3) A direction given by the Bank may—

(a) require records of financial contracts to be maintained;

(b) specify the details or kinds of detail which are to be recorded;

(d) specify a period of time within which a relevant person is to be capable of producing records (“a time-limit”);

(e) specify different time-limits for different kinds of financial contract.

(4) The Bank must exercise its functions under this article in accordance with any technical standards under paragraph (5).

(5) The Bank may make technical standards relating to—

(a) the circumstances in which it will give a direction under this paragraph; and

(b) the information that must be contained in the records required by such a direction.

(4) Directions may be given with general effect or with respect to a particular relevant person or class of relevant persons, but may not specify different time-limits for different relevant persons or classes of relevant person.

PART 6 — Assessment of resolvability and removal of impediments to resolvability

CHAPTER 1 — Assessment of resolvability of institutions

Application and interpretation of Chapter 1

59

(1) This Chapter applies where the Bank draws up a resolution plan for an institution in accordance with Chapter 1 of Part 5, or reviews a resolution plan drawn up in accordance with that Chapter.

(2) In this Chapter “assessment of resolvability” means an assessment of the extent to which it would be feasible and credible to apply the resolution tools, exercise resolution powers or take insolvency proceedings in respect of the institution while avoiding to the maximum extent possible any significant adverse effect on the financial system of the United Kingdom or the continuity of the institution's critical functions.

Assessment of resolvability

60

(1) For the purpose of drawing up or reviewing the resolution plan the Bank must make an assessment of resolvability.

(2) For the purpose of making the assessment of resolvability the Bank must—

(a) consider all relevant matters, including the matters set out in Schedule 2B and in any technical standards under paragraph (2A);

(b) have regard to the circumstances under which the institution may fail or be likely to fail, in particular—

(i) supposing that there is a situation of widespread financial instability or an occurrence of events which pose systemic risk; and

(ii) supposing that there is no such a situation or occurrence;

(i) extraordinary public financial support;

(ii) emergency liquidity assistance ; or

(iii) any other liquidity assistance provided by the Bank under non-standard collateralisation, tenor and interest rate terms; and

(d) consult—

(i) the appropriate regulator...

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) The Bank may make technical standards providing—

(a) further examples of relevant matters to be considered; and

(b) criteria to be examined,

for the purposes of making the assessment of resolvability.

(3) Paragraph (2) has effect subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(b)) with respect to the assessment of resolvability.

(4) The institution is deemed to be resolvable if the Bank concludes that it would be feasible and credible to apply the resolution tools, exercise resolution powers or take insolvency proceedings in respect of the institution while avoiding to the maximum extent possible any significant adverse effect on the financial system of the United Kingdom or the continuity of the institution's critical functions.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 2 — Assessment of resolvability of groups

Application and interpretation of Chapter 2

61

(1) This Chapter applies where the Bank—

(a) ... draws up a group resolution plan in accordance with Chapter 2 of Part 5 or reviews a plan drawn up in accordance with that Chapter...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In this Chapter “assessment of group resolvability” means an assessment of the extent to which it would be feasible and credible to apply the resolution tools or exercise resolution powers in respect of resolution entities, or take insolvency proceedings in respect of group entities while avoiding to the maximum extent possible any significant adverse effect on the financial system of the United Kingdom or the continuity of the critical functions of group entities.

Assessment of group resolvability where the PRA or FCA is the consolidating supervisor

62

(1) This article applies in relation to a relevant group in respect of which the PRA or FCA is the consolidating supervisor.

(2) For the purpose of drawing up or reviewing a group resolution plan the Bank must make an assessment of group resolvability in respect of the relevant group and, where there is more than one resolution group in the relevant group, in respect of each resolution group.

(3) For the purpose of making the assessment of group resolvability the Bank must—

(a) consider all relevant matters, including the matters set out in Schedule 2B and in any technical standards under paragraph (2A);

(b) have regard to the circumstances under which resolution entities may meet the conditions for resolution, in particular—

(i) supposing that there is a situation of widespread financial instability or an occurrence of events which pose systemic risk; and

(ii) supposing that there is no such a situation or occurrence;

(i) extraordinary public financial support;

(ii) emergency liquidity assistance; or

(iii) any other liquidity assistance provided by the Bank under non-standard collateralisation, tenor and interest rate terms; and

(d) consult—

(i) the appropriate regulator;

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3A) The Bank may make technical standards providing—

(a) further examples of relevant matters to be considered; and

(b) criteria to be examined,

for the purposes of making the assessment of group resolvability.

(4) Paragraph (3) has effect subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(b)) with respect to the assessment of group resolvability.

(5) The relevant group or a resolution group is deemed to be resolvable if the Bank concludes that it would be feasible and credible to apply the resolution tools or exercise resolution powers in respect of resolution entities, or take insolvency proceedings in respect of group entities while avoiding to the maximum extent possible any significant adverse effect on the financial system of the United Kingdom or the continuity of the critical functions of group entities.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assessment of group resolvability where neither the PRA nor the FCA is the consolidating supervisor

63

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3 — Removal of impediments to resolvability of institutions

Application and interpretation of Chapter 3

64

(1) This Chapter applies where the Bank, after consulting the appropriate regulator and having made an assessment of resolvability in accordance with Chapter 1, determines that there are substantive impediments to the resolvability of an institution (“the impediments”).

(2) In this Chapter—

“determination” means a determination of a kind referred to in paragraph (1);

“pre-resolution powers” means the powers conferred on the Bank by section 3A of the Banking Act 2009 (removal of impediments to the exercise of stabilisation powers etc); and

“relevant proposals” means proposals which—are prepared by an institution to which notice is given under article 65;are for taking measures to address or remove the impediments including a timetable for doing so; andare required to be submitted by the institution within the response period.

“response period” means—in a case where the institution does not... meet ... the minimum requirement for own funds and eligible liabilities in accordance with section 3A(4B) of the Banking Act, two weeks beginning with the date on which the institution received the notice; andin any other case, four months beginning with that date.

Notice of determination

65

(1) The Bank must give notice of a determination to—

(a) the institution concerned; and

(b) the appropriate regulator...

(2) The notice must—

(a) be in writing;

(b) set out the impediments; and

Effect of notice of determination

66

(1) A notice under article 65 has the effect of suspending the Bank's duty to draw up a resolution plan for the institution (or review the resolution plan adopted for the institution) until the Bank has approved relevant proposals or exercised pre-resolution powers.

(2) The Bank, after consulting the appropriate regulator, must assess whether the measures set out in relevant proposals would adequately address or effectively remove the impediments.

(3) Where the institution—

(a) fails to submit relevant proposals within the response period, or

(b) the Bank concludes that the measures set out in relevant proposals would not adequately address or effectively remove the impediments,

the Bank must exercise pre-resolution powers with the object of requiring the institution to take specified measures to address or remove the impediments (“remedial measures”).

(4) In a direction given by the Bank for that purpose the Bank must—

(a) demonstrate how the measures set out in relevant proposals would not adequately address or effectively remove the impediments;

(b) demonstrate how the remedial measures will adequately address or effectively remove the impediments in a manner proportionate to the burden or restriction imposed by the direction; and

(i) prepare a plan showing how it will comply with the remedial measures; and

(ii) submit that plan within one month beginning on the date of the direction.

(5) Where the consent of the appropriate regulator is not required under section 3A(5) of the Banking Act 2009, the Bank must consult the appropriate regulator and, where appropriate, the Financial Policy Committee before determining remedial measures.

(6) For the purpose of assessing relevant proposals and determining remedial measures the Bank must take account of—

(a) the threat to financial stability posed by the impediments; and

(b) the effect of the remedial measures on—

(i) the business and financial stability of the institution and its ability to contribute to the economy of the United Kingdom ...;

(ii) the market in the United Kingdom for financial services;

(iii) the financial stability of the United Kingdom.

(7) The Bank must give the institution written notice of the remedial measures, including a reasoned account of its decision to require the institution to take those measures.

Right of appeal

67

(1) A person who is aggrieved by—

(a) a determination,

(b) the Bank's conclusion that the measures set out in relevant proposals would not adequately address or effectively remove the impediments, or

may refer the matter to the Tribunal (within the meaning given in section 417(1) of FSMA ).

(2) Part 9 of FSMA (hearings and appeals) has effect in relation to a reference to the Tribunal under paragraph (1) as if it were a reference of a decision of the Bank under FSMA.

CHAPTER 4 — Removal of impediments to resolvability of group entities where the PRA or FCA is the consolidating supervisor

Application and interpretation of Chapter 4

68

(1) This Chapter applies where, in relation to a relevant group—

(a) the PRA or FCA is the consolidating supervisor; and

(b) the Bank, having made an assessment of group resolvability in accordance with Chapter 2, has identified substantive impediments to the resolvability of a group entity (“the impediments”).

(2) In this Chapter—

“group entity” means the UK parent undertaking or a subsidiary within the relevant group which is—an institutiona financial institution; ora parent undertaking of an institution which is ...—...a qualifying parent undertaking;

“measures for structural change” means—measures for changing the legal or operational structure of a group entity in order to ensure, through the application of resolution tools and the exercise of resolution powers, that critical functions can be separated, legally or operationally, from the performance of other functions;measures for establishing a UK parent financial holding company; orwhere an institution is a subsidiary of a relevant MAHC, measures for establishing a financial holding company as a parent undertaking of the institution for the purpose of—facilitating the application of resolution tools and the exercise of resolution powers to achieve any of the resolution objectives; orensuring that applying the resolution tools and exercising the resolution powers does not have an adverse effect on the non-financial part of the group of the relevant MAHC;

“the plan” means the group resolution plan being drawn up for the relevant group (or the group resolution plan which has been adopted for the group and is being reviewed);

“pre-resolution powers” has the same meaning as in Chapter 3;

“qualifying parent undertaking” has the meaning given by section 192B of FSMA (meaning of “qualifying parent undertaking”); and

“remedial measures” means measures to address or remove the impediments.

“response period” means—in a case where the institution does not, as applicable, meet the requirements referred to in Articles 92a and 494 of the capital requirements regulation or the minimum requirement for own funds and eligible liabilities in accordance with section 3A(4B) of the Banking Act, two weeks beginning with the date on which the institution received the notice; andin any other case, four months beginning with that date.

(3) “Relevant MAHC”, in the definition of “measures for structural change”, means a mixed activity holding company which has at least one subsidiary which—

(a) is an institution; and

(b) is not a subsidiary of a financial holding company which is also a subsidiary of the mixed activity holding company.

Report on substantive impediments to the resolvability of group entities

69

(1) The Bank, in co-operation with ... the appropriate regulator ..., must prepare a report which—

(a) contains an analysis of the impediments;

(b) proposes remedial measures for the impediments; and

(2) The Bank must submit its report to the UK parent undertaking and the appropriate regulator.

Suspension of requirement to draw up or review group resolution plan

70

(1) ... The submission of the Bank's report under article 69 has the effect of suspending the Bank's duty to draw up or review the plan until the Bank determines remedial measures under article 71(3)(c).

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Determining remedial measures

71

(1) The UK parent undertaking may, within the response period beginning with the date on which it receives the Bank's report, submit to the Bank its observations on the report and a proposal to take alternative remedial measures (“alternative proposal”).

(2) The Bank must send such observations and any alternative proposal to the appropriate regulator.

(3) ... The Bank must—

(a) confirm the impediments with or without modification;

(b) assess any alternative proposal; and

(i) where the Bank concludes that the measures set out in an alternative proposal would adequately address or effectively remove the impediments, by approving that proposal (with or without modification);

(ii) otherwise, by specifying the measures which are to be taken.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The Bank must consult the appropriate regulator and, where appropriate, the Financial Policy Committee before determining remedial measures under paragraph (3)(c).

(6) In considering any matter referred to in paragraph (3) or (4) the Bank must take account of—

(a) the threat to financial stability posed by the impediments; and

(b) the effect of the measures on—

(i) the business and financial stability of each group entity and its ability to contribute to the economy of the United Kingdom ...

(ii) the market in the United Kingdom for financial services;

(iii) the financial stability of the United Kingdom.

(7) Paragraphs (8) and (9) apply where remedial measures determined under paragraph (3) ... are to be implemented by a group entity set up in the United Kingdom.

(8) The Bank must exercise pre-resolution powers with the object of requiring the entity to take the remedial measures.

(9) In a direction given for that purpose, the Bank—

(a) if it has specified the measures which are to be taken, must demonstrate how the measures set out in an alternative proposal would not adequately address or effectively remove the impediments;

(b) must demonstrate how the remedial measures will adequately address or effectively remove the impediments in a manner proportionate to the burden or restriction imposed by the direction; and

(i) prepare a plan showing how it will comply with the remedial measures; and

(ii) submit that plan within one month beginning on the date of the direction.

Joint decision on impediments to group resolvability and remedial measures

72

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA

73

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA

74

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 5 — Removal of impediments to resolvability of groups where neither the PRA nor the FCA is the consolidating supervisor

Application and interpretation of Chapter 5

75

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Suspension of requirement to draw up or review group resolution plan

76

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Determining remedial measures

77

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Joint decision on impediments to group resolvability and remedial measures

78

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to reach joint decision: disagreement by the Bank with joint proposals

79

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Failure to reach joint decision: agreement by the Bank with joint proposals

80

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA

81

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA

82

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 7 — Intra-group financial support

CHAPTER 1 — Authorisation of agreement for group financial support where the PRA or FCA is the consolidating supervisor

Application and interpretation of Chapter 1

83

(1) This Chapter applies where, in relation to a relevant group—

(a) the PRA or FCA is the consolidating supervisor; and

(b) the PRA or FCA (or each of them) receives from the UK parent undertaking an application for authorisation of a group financial support agreement (“the application”).

(2) In this Chapter—

“conditions for financial support” means the following conditions— there is a reasonable prospect that the financial support provided significantly redresses the financial difficulties of the group entity receiving the financial support;the provision of financial support has the objective of preserving or restoring the financial stability of the group as a whole or any of the entities of the group and is in the interests of the group entity providing the financial support;the financial support is provided on terms, including consideration, in accordance with Article 19.7 of the recovery and resolution directive;there is a reasonable prospect, on the basis of the information available to the management body of the group entity providing financial support at the time when the decision to grant financial support is taken, that the consideration for the support will be paid and, if the financial support is given in the form of a loan, that the loan will be reimbursed, by the group entity receiving the financial support;if the financial support is given in the form of a guarantee or any form of security and the guarantee or the security is enforced, the condition referred to in paragraph (d) shall apply to the liability arising for the recipient;the provision of the financial support would not jeopardise the liquidity or solvency of the group entity providing the financial support;the provision of the financial support would not create a threat to financial stability in the United Kingdom;the group entity providing the financial support complies, at the time the financial support is provided, with—the requirements relating to capital or liquidity imposed by or under legislation upon which the United Kingdom relied immediately before IP completion day to meet its obligations with respect to the capital requirements directive; andthe requirements imposed by or under legislation upon which the United Kingdom relied immediately before IP completion day to meet its obligations with respect to Article 104.2 of the capital requirements directive,and the provision of the financial support shall not cause the group entity to infringe those requirements, unless the group entity is authorised by the appropriate regulator on an individual basis;the provision of the financial support would not undermine the resolvability of the group entity providing the financial support.

“financial support” includes—a loan, a guarantee, the provision of assets for use as collateral or any combination of these forms of support; andprovision for support (in any form) in one or more transactions or in a transaction entered into by the group institution which is the intended recipient of the support and any other person;

“group entity” means a relevant parent undertaking or group subsidiary which proposes to enter into the group financial support agreement;

“group financial support agreement” means an agreement—which is proposed for the provision of financial support to a group institution which, at any time after the agreement has been concluded, meets the conditions for early intervention; andthe parties to which include a relevant parent undertaking and one or more group subsidiaries set up in any country , other than the United Kingdom, in which the relevant parent undertaking is set up;

“group institution” means a group entity which is an institution;

“group subsidiary” means an undertaking which is—a subsidiary of a relevant parent undertaking; andan institution or financial institution;

“relevant competent authority” means a competent authority, other than the consolidating supervisor, which has authorised a group entity; and

“relevant parent undertaking” means a UK parent institution, a financial holding company, a mixed financial holding company or a mixed activity holding company.

(2A) The PRA and the FCA may each make technical standards relating to conditions (a), (c), (f) and (i) of the definition of “conditions for financial support” provided in paragraph (2) in so far as those conditions apply to a group financial support agreement submitted to it by a UK parent undertaking.

Review of group financial support agreement and decision on authorisation

84

(1) The appropriate regulator must review the group financial support agreement jointly with the relevant competent authority.

(2) The purpose of the review is to determine whether—

(a) the terms of the agreement are compatible with the conditions for financial support, including whether they make provision to ensure that financial support would be given in accordance with those conditions; and

(b) any group institution already meets the conditions for early intervention.

(3) The matter referred to in paragraph (2)(a) is to be determined having regard to the potential impact of the agreement, if it is concluded, on the financial stability of the United Kingdom.

(4) The appropriate regulator must refuse the application and prohibit the conclusion of the group financial support agreement if it is determined on review that—

(a) the terms of the agreement are not compatible with the conditions for financial support; or

(b) a group institution already meets the conditions for early intervention.

(5) The appropriate regulator must otherwise grant the application.

Duty to transmit a copy of application

85

(1) The appropriate regulator must send a copy of the application or, where paragraph (2) has effect in relation to any information, of the application without that information, without delay to any relevant competent authority.

(2) This article does not require any information contained in the application to be disclosed if its disclosure would be contrary to section 348 of FSMA.

Joint decision with other competent authorities

86

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA

87

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA

88

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Duty to transmit a copy of authorised agreement

89

The appropriate regulator must send a copy of the group financial support agreement, if it is authorised, to the Bank ....

Amendment of authorised agreement

90

(1) This article applies where—

(a) the parties to an agreement authorised under this Chapter wish to amend the agreement; and

(b) rules made by the PRA or FCA under FSMA require the amendment to be authorised before it is made.

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