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The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018

Type Statutory-Instrument

Publication 2018-12-20

Last updated 2023-07-11

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Made: 20th December 2018

Coming into force in accordance with regulation 1

The Treasury are designated for the purpose of section 2(2) of the European Communities Act 1972 in relation to financial services.

The Treasury make the following Regulations in exercise of the powers conferred by section 2(2) of the European Communities Act 1972 and section 8(1) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018 .

A draft of these Regulations has been approved by a resolution of each House of Parliament in accordance with paragraph 2A(3)(a) of Schedule 2 to the European Communities Act 1972 and paragraph 1(1) of Schedule 7 to the European Union (Withdrawal) Act 2018.

Citation and commencement

1

(1) These Regulations may be cited as the Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018.

(2) Subject to paragraph (3), these Regulations come into force on exit day.

(3) The following provisions come into force on the day after the day on which these Regulations are made—

(a) this regulation,

(b) in Schedule 1, paragraphs 3(2), 7(2)(b) and 15(3),

(d) in Schedule 3, paragraph 1(29) and

(e) in Schedule 4, paragraphs 2(2)(c), 4(2)(b) and 7(3).

Amendments of the Banking Act 2009

2

Schedule 1 amends the Banking Act 2009 .

Amendments of other primary legislation

3

Schedule 2 amends—

(a) the Insolvency Act 1986 and

(b) the Financial Services (Banking Reform) Act 2013 .

Amendments of the Bank Recovery and Resolution (No.2) Order 2014

4

Schedule 3 amends the Bank Recovery and Resolution (No.2) Order 2014 .

Amendments of other secondary legislation

5

Schedule 4 amends—

(a) the Banking Act 2009 (Third Party Compensation Arrangements for Partial Property Transfers) Regulations 2009 ,

(b) the Banking Act 2009 (Restriction of Partial Property Transfers) Order 2009 ,

(d) the Banking Act 2009 (Banking Group Companies) Order 2014 ,

(e) the Bank Recovery and Resolution Order 2014 ,

(f) the Banking Act 2009 (Mandatory Compensation Arrangements Following Bail-in) Regulations 2014 ,

(g) the Banking Act 2009 (Restriction of Special Bail-in Provision, etc.) Order 2014 ,

(h) the Building Societies (Bail-in) Order 2014 and

(i) the Bank Recovery and Resolution Order 2016 .

Revocation and amendments of retained direct EU legislation

6

The following instruments are revoked—

(a) Commission Delegated Regulation (EU) 2015/63 of 21 October 2014 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to ex antecontributions to resolution financing arrangements,

(b) Commission Delegated Regulation (EU) 2016/1434 of 14 December 2015 correcting Delegated Regulation (EU) 2015/63 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to ex antecontributions to resolution financing arrangements and

(c) Commission Delegated Regulation (EU) 2017/867 of 7 February 2017 on classes of arrangements to be protected in a partial property transfer under Article 76 of Directive 2014/59/EU of the European Parliament and of the Council.

7

The following instruments are amended in accordance with Schedule 5—

(a) Commission Delegated Regulation (EU) 2016/778 of 2 February 2016 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to the circumstances and conditions under which the payment of extraordinary ex postcontributions may be partially or entirely deferred, and on the criteria for the determination of the activities, services and operations with regard to critical functions, and for the determination of the business lines and associated services with regard to core business lines and

(b) Commission Delegated Regulation (EU) 2016/860 of 4 February 2016 specifying further the circumstances where exclusion from the application of write-down or conversion powers is necessary under Article 44(3) of Directive 2014/59/EU of the European Parliament and of the Council establishing a framework for the recovery and resolution of credit institutions and investment firms.

Transitional provisions: pre-exit EEA resolution action

8

(1) Section 89H of the Banking Act 2009 (recognition of third-country resolution actions) does not apply in relation to any of the following where taken before IP completion day under the law of an EEA State other than the United Kingdom—

(a) the application of a resolution tool within the meaning of Article 2.1(19) of the recovery and resolution directive;

(b) the exercise of a resolution power within the meaning of Article 2.1(20) of the recovery and resolution directive;

(c) any other measure to which Article 66 of the recovery and resolution directive applied immediately before IP completion day.

(2) In paragraph (1) “recovery and resolution directive” has the meaning given in section 3(1) of the Banking Act 2009.

(3) Paragraph (1) is without prejudice to the provision made by paragraph 37 of Schedule 8 to the European Union (Withdrawal) Act 2018.

SCHEDULE 1 — Amendments of the Banking Act 2009

Introduction

1

The Banking Act 2009 is amended as follows.

Special resolution regime: introduction

2

Section 3 (interpretation of Part 1) is amended in accordance with paragraphs 3 to 6.

3

(1) Subsection (1) is amended as follows.

(2) In the definition of “the capital requirements regulation” at the end insert “ as it had effect on the day on which the Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394) were made, ”.

(3) In the definition of “critical functions”—

(a) for “subsection (2)” substitute “ subsections (2) and (2A) ”;

(b) after “operations” insert “ (wherever carried out) ”;

(d) in paragraph (a), at the end insert “ of the United Kingdom ”;

(e) in paragraph (b), at the end insert “ in the United Kingdom ”.

(4) After that definition insert—

“FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);

(5) After that definition insert—

“normal insolvency proceedings” means the collective insolvency proceedings which—entail the partial or total divestment of a debtor and the appointment of a liquidator or administrator (or a similar officeholder),are normally applicable to institutions under the law of any part of the United Kingdom, andare either specific to those institutions or generally applicable to any natural or legal person;and, in particular, includes the bank insolvency procedure and the bank administration procedure;.

4

In subsection (2), for paragraph (a) (but not the “and” after it) substitute—

(a) Article 6 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of critical functions) applies,

5

After subsection (2) insert—

(2A) The Treasury may by regulations made by statutory instrument specify criteria for the determination of the activities, services and operations referred to in the definition of “critical functions”. (2B) The power conferred by subsection (2A) includes— (a) power to amend or revoke Article 6 of Commission Delegated Regulation (EU) 2016/778; and (b) power to amend or repeal subsection (2)(a). (2C) A statutory instrument containing regulations under subsection (2A) is subject to annulment in pursuance of a resolution of either House of Parliament.

6

After subsection (3) insert—

(4) In this Part a reference to the PRA rulebook is to the rulebook published by the PRA containing rules made by the PRA under the Financial Services and Markets Act 2000 as the rulebook has effect on IP completion day.

Objectives and Code

7

(1) Section 4 (special resolution objectives) is amended as follows.

(2) In subsection (4)(a)—

(a) for the words from “authorised” to “Article 25,” substitute “ authorised or recognised in the United Kingdom in accordance with Article 14 or 25 ”;

(b) at the end insert “ , as that Regulation had effect on the day on which the Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394) were made ”.

(3) For subsection (7) substitute—

(7) Objective 5 is to protect investors and depositors to the extent that they have investments or deposits covered by the FSCS.

Mandatory write-down, conversion etc of capital instruments

8

(1) Section 6A (cases where mandatory write-down, conversion, etc applies) is amended as follows.

(2) In subsection (4)(d), for the words from the beginning to “directive” substitute “ the Bank of England makes a determination ”.

(3) In subsection (9)—

(a) omit the definition of “appropriate authority”;

(b) in the definition of “consolidated basis” for “Article 2.1(7) of the recovery and resolution directive” substitute “ Article 4.1(47) and (48) of the capital requirements regulation ”.

9

In section 6B (mandatory write-down, conversion, etc of capital instruments), in subsection (9), for the words from “, pursuant” to the end substitute—

(a) pursuant to this section as it applies in relation to a banking group company by virtue of section 81AA, or (b) in the course of applying the bail-in option provided for by section 12A or section 81BA.

10

(1) Section 6C (mandatory reduction instruments: implementation of requirements of section 6B) is amended as follows.

(2) In subsection (4)(a)—

(a) for “parent” (where it first appears) substitute “ UK parent ”, and

(b) for the words from “resolution” to the end substitute “ Bank of England ”.

(3) In subsection (4)(b) for “State or a government entity” substitute “ Treasury ”.

(4) In subsection (4)(d), for the words from “complies” to the end substitute “ represents appropriate compensation to the affected creditor for any loss incurred in consequence of the conversion of that instrument or liability. ”.

(5) After subsection (4) insert—

(4A) Where different conversion rates are applied to different classes of instrument or liability, a lower conversion rate must be applied to subordinated debt than is applied to debts ranking higher in the hierarchy of claims in normal insolvency proceedings.

(6) In subsection (7), omit the definition of “resolution authority”.

Valuation before mandatory write-down of capital or stabilisation action

11

(1) Section 6E (pre-resolution valuation) is amended as follows.

(2) For subsection (6) substitute—

(6) The valuation carried out under this section must follow the methodology specified in— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are retained EU law, or (b) technical standards made under subsection (11)(a)

(3) For subsection (10) substitute—

(10) A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the bank in accordance with— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are retained EU law, or (b) technical standards made under subsection (11)(b). (11) The Bank of England may make technical standards relating to— (a) the methodology for assessing the value of the assets and liabilities of a bank for the purposes of a valuation under this section; (b) the methodology for calculating and including a buffer for additional losses in the provisional valuation.

Exercise of powers: general

12

In section 7 (general conditions for exercise of stabilisation powers), in subsection (5E)(a) for “central banks” substitute “ the Bank of England ”.

13

(1) Section 7A (effect on other group members, financial stability in EU etc) is amended as follows.

(2) In the heading, for “EU” substitute “ UK ”.

(3) In subsection (1)—

(a) in paragraph (b) for “EEA” substitute “ United Kingdom ”;

(b) in paragraph (c) for “European Union or of the EEA states” substitute “ United Kingdom ”.

(4) In subsection (2)—

(a) in paragraph (b) for the words from “European” to “operating)” substitute “ United Kingdom ”;

(b) in paragraph (c)—

(i) for “third countries” in the first place it appears substitute “ countries other than the United Kingdom ”;

(ii) omit “third” in the second place it appears.

14

In section 8ZA (specific conditions: asset management vehicle), omit subsection (5).

The stabilisation options

15

(1) Section 11A (private sector purchaser: marketing) is amended as follows.

(2) In subsection (5)(a) omit “or another EEA state”.

(3) After subsection (7) insert—

(8) The reference in subsection (7) to Regulation (EU) No 596/2014 is to that Regulation as it had effect on the day on which the Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394) were made.

16

In section 12AA (bail-in: sequence of write-down and conversion of capital instruments and liabilities), in subsection (2), omit the definition of “normal insolvency proceedings”.

Transfer of securities

17

In section 14 (interpretation: “securities”), in subsection (5)(b) for the words from “Regulation” to the end substitute “ the capital requirements regulation ”.

Transfer of property

18

In section 35 (transferable property), in subsection (1)—

(a) in paragraph (d) at the end insert “ (including under legislation of the European Union) ”;

(b) in paragraph (e) omit “(including legislation of the European Union)”.

Bail-in option

19

(1) Section 48B (special bail-in provision) is amended as follows.

(2) In subsection (8)(g) for the words from “as referred” to the end substitute “ within the meaning of rule 3 of Part 152 (remuneration) of the PRA rulebook (other than persons deemed by virtue of rule 3.2 not to be material risk takers and notified to the PRA in accordance with rule 3.2). ”

(3) In subsection (8)(j) for the words from “Financial Services Compensation” to the end substitute “ FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) of the Financial Services and Markets Act 2000. ”.

(4) In subsection (10), omit paragraph (b) (and the “and” before it).

(5) In subsection (12)(c)—

(a) for “micro-enterprises, small enterprises or medium-sized enterprises” substitute “ micro, small and medium-sized enterprises ”;

(b) for “an EEA State” substitute “ the United Kingdom ”.

(6) After subsection (13) insert—

(13A) The Treasury may by regulations made by statutory instrument make further provision in connection with the exercise of functions under subsection (10) (including provision about further circumstances in which functions under that subsection may or must be exercised). (13B) Regulations under subsection (13A) may— (a) amend subsections (12) and (13) by adding any provision; (b) amend or revoke Commission Delegated Regulation (EU) 2016/860; (c) amend that Regulation by adding, omitting or varying any provision (pending the revocation of the whole Regulation under paragraph (b). (13C) A statutory instrument containing regulations under subsection (13A) may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.

(7) In subsection (14)—

(a) at the appropriate place insert—

“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for the bank or a group which includes the bank (or in the case of an instrument made in relation to a resolution company, of the resolution company);

(b) for the words from “ “micro-enterprise”” to the end substitute—

“micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC.

(8) After subsection (14) insert—

(15) For the purposes of the definition of “core business lines”— (a) Article 7 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of core business lines) applies, and (b) “group” has the meaning given by section 3(2)(b). (16) The Treasury may by regulations made by statutory instrument specify criteria for the determination of the business lines and associated services referred to in the definition of “core business lines”. (17) The power conferred by subsection (16) includes— (a) power to amend or revoke Article 7 of Commission Delegated Regulation (EU) 2016/778; and (b) power to amend or repeal subsection (15)(a). (18) A statutory instrument containing regulations under subsection (16) is subject to annulment in pursuance of a resolution of either House of Parliament.

20

In section 48C (meaning of “protected deposit”), in subsection (1) for the words from “a deposit” to the end substitute “ the FSCS ”.

21

(1) In section 48D (general interpretation of section 48B), subsection (1) is amended as follows.

(2) In the definition of “credit institution” for “Article 2.5(2) to (23)” substitute “ Article 2.5(2), (3) or (23) ”.

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

(4) In the definition of “investment firm”—

(a) for “Regulation (EU) No 575/2013 of the European Parliament and of the Council” substitute “ the capital requirements regulation ”;

(b) after “specified in” insert “ rules made by the FCA or PRA for the purpose of implementing ”.

22

(1) Section 48H (business reorganisation plans) is amended as follows.

(2) In subsection (1)—

(a) omit the “and” after paragraph (a);

(b) after paragraph (b) insert—

; and (c) submit to the Bank of England progress reports on the implementation of the plan at such intervals as the instrument may require.

(3) After subsection (7) insert—

(7A) The Bank of England may make technical standards which— (a) require progress reports mentioned in subsection (1)(c) to include such matters as are specified in the technical standards; or (b) otherwise relate to the content of those progress reports, so far as dealing with matters so specified.

Termination rights etc

23

(1) Section 48Z (termination rights etc) is amended as follows.

(2) In subsection (1)—

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

(b) in the definition of “crisis prevention measure”—

(i) omit the words from “has” to “Kingdom”;

(ii) in paragraph (a), for the words from “of a” to the end substitute “ under the Bank Recovery and Resolution (No 2) Order 2014 (SI 2014/3348) of a requirement to take relevant measures as described in article 15, 16, or 23 of that Order, ”;

(iii) in paragraph (b), for the words from “Article” to the end substitute “ section 3A, ”;

(iv) for paragraph (c) substitute—

(c) the taking by the FCA or the PRA of a measure for early intervention under article 111 of the Bank Recovery and Resolution (No. 2) Order 2014,

“third-country institution” means an institution established in a country or territory other than the United Kingdom that would, if it were established within the United Kingdom, be regarded as a bank, building society, credit union or investment firm;

(d) after the definition of “third-country institution” insert—

“third-country parent financial holding company” means a parent financial holding company (within the meaning of Article 4.1(30) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom; “third-country parent institution” means a parent institution (within the meaning of Article 4.1(28) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom; “third-country parent mixed financial holding company” means a parent mixed financial holding company (within the meaning of Article 4.1(32) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;

(e) for the definition of “third-country parent undertaking” substitute—

“third-country parent undertaking” means a third-country parent institution, a third-country parent financial holding company or a third-country parent mixed financial holding company.

Independent valuer: valuation under section 6E or 48X

24

(1) Section 62A (meaning of independent valuer in sections 6E and 48X) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (a) omit the words from “adopted” to “directive”;

(b) in paragraph (b) for “have been adopted by the European Commission” substitute “ exist ”.

(3) After subsection (2) insert—

(2A) In subsection (2) “regulatory technical standards” means— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are retained EU law, or (b) technical standards made under subsection (2B). (2B) The Bank of England may make technical standards specifying the circumstances in which for the purposes of this section a person is to be considered independent from the Bank of England and the bank to which the valuation relates.

Incidental functions

25

In section 70A (suspension of obligations), in subsection (7)—

(a) in the definition of “eligible claim” omit the words from “or a” to the end;

(b) in the definition of “eligible deposit” omit the words from “or a” to the end.

26

In section 70C (suspension of termination rights), in subsection (6) omit the words from “and, where” to the end.

27

(1) Section 70D (suspension: general provisions) is amended as follows.

(2) In subsection (1), in the definition of “excluded person”—

(a) omit paragraph (b);

(b) in paragraph (c) omit “, EEA central counterparty”.

(3) In subsection (2) omit “, “EEA central counterparty””.

28

In section 75 (power to change law), in subsection (9), for the definition of “third-country institution” substitute—

“third-country institution” has the same meaning as in section 48Z;

Groups

29

(1) Section 81AA (cases where mandatory write-down, conversion etc applies: banking group companies) is amended as follows.

(2) In subsection (2)(c)—

(a) in sub-paragraph (i) for “article 2.1(23) of the recovery and resolution directive” substitute “ Article 4.1A of the capital requirements regulation ”;

(b) in sub-paragraph (ii) for “Article 1.1(c) or (d) of that directive” substitute “ subsection (2A). ”.

(3) After subsection (2) insert—

(2A) The entities covered by subsection (2)(c)(ii) are— (a) an entity of any of the following kinds which is established in the United Kingdom— (i) a financial holding company; (ii) a mixed financial holding company; (iii) a mixed-activity holding company; (b) a UK parent financial holding company or a UK parent mixed financial holding company, and expressions used in this subsection have the same meaning as in the capital requirements regulation.

(4) In subsection (3)(b) omit sub-paragraph (ii) (but not the “and” after it).

(5) In subsection (4)(c) omit “, (6)”.

(6) Omit subsection (6).

(7) In subsection (8)(b) omit “or EU institution”.

(8) In subsection (9) omit “, EU resolution authority, competent authority”.

(9) In subsection (11)(c)—

(a) omit sub-paragraphs (i) and (ii);

(b) in sub-paragraph (iii), for the words from “neither” to “but” substitute “ the parent undertaking of the group is not a UK authorised person and ”.

(10) In subsection (14)—

(a) omit the definitions of “competent authority”, “consolidating supervisor”, “EU institution” and “EU resolution authority”;

(b) in the definition of “financial institution”, for the words from “meaning” to the end substitute “ same meaning as in the capital requirements regulation ”.

(c) in the definition of “relevant third-country authority”, for the words from “has” to the end substitute “ means an authority in a country or territory other than the United Kingdom which has functions corresponding to those of the Bank of England, the FCA or the PRA, in relation to bank recovery and resolution ”.

30

(1) Section 81B (sale to commercial purchaser and transfer to bridge bank) is amended as follows.

(2) In subsection (2) omit paragraph (b).

(3) In subsection (2A) omit “, EU resolution authority”.

(4) In subsection (9)—

(a) omit the definitions of “EU institution” and “EU resolution authority”;

(b) in the definition of “relevant third-country authority”, for the words from “Article” to the end substitute “ section 81AA(14) ”.

31

(1) Section 81ZBA (transfer to asset management vehicle) is amended as follows.

(2) In subsection (2) omit paragraph (b).

(3) In subsection (2A) omit “, EU resolution authority”.

(4) In subsection (9), omit the definition of “normal insolvency proceedings”.

32

In section 81BA (bail-in option)—

(a) in subsection (2) omit paragraph (b);

(b) in subsection (2A) omit “, EU resolution authority”.

33

In section 81CA (section 81BA: supplemental), in subsection (5), omit “, EU institution”.

34

In section 81D (interpretation: “banking group company” etc), in subsection (1)—

(a) omit “EU institution”;

(b) for “81B(9)” substitute “ 81AA(14) ”.

Appointment of investigators

35

In section 83ZD (appointment of person to carry out investigations in particular cases), in subsection (3)(b) for “gives” substitute “ , immediately before IP completion day, gave ”.

36

(1) Section 83ZE (investigations etc in support of foreign resolution authorities) is amended as follows.

(2) In subsection (3)—

(a) omit paragraph (a) (with the “or” after it);

(b) in paragraph (b), for the words from “those” to the end substitute “ the stabilisation powers of the Bank of England under this Part. ”.

(3) Omit subsections (5), (8) and (9).

(4) In subsection (10)—

(a) omit paragraph (a) (with the “or” after it);

(b) in paragraph (b)—

(i) for the words from “territory” to “state” substitute “ country or territory outside the United Kingdom ”;

(ii) for “(2)(b)” substitute “ (3)(b) ”.

Enforcement of relevant requirements

37

In section 83ZY (publication of information relating to certain Bank of England decisions etc), in subsection (10) omit paragraph (b) (with the “and” preceding it).

38

In section 83ZZ (co-operation), in paragraph (c) for “giving” substitute “ which, immediately before IP completion day, gave ”.

Special cases

39

(1) In Section 83A (Modifications of Part 1), the Table of modifications of Part 1 (in its application to an FCA-regulated bank) is amended as follows.

(2) At the beginning insert—

Section 3	Treat the definition of “normal insolvency proceedings” in subsection (1) as including investment bank special administration established by the Investment Bank Special Administration Regulations 2011 (S.I. 2011/245).

(3) In the entry for section 8ZA omit paragraph (b).

(4) Omit the entry for section 12AA.

(5) In the entry for section 81ZBA omit paragraph (c).

(6) Omit the entry for section 89H.

40

In section 89A (application of Part 1 to investment firms), in subsection (1), in the Table, in the entry for section 12AA, for the words in column 2 substitute “ References to normal insolvency proceedings do not include a reference to the bank insolvency procedure. ”.

Third-country resolution actions

41

(1) Section 89H (recognition of third-country resolution actions) is amended as follows.

(2) In subsection (4)—

(a) in paragraph (a) omit “or another EEA state”;

(b) in paragraph (c)—

(i) for “an EEA state” substitute “ the United Kingdom ”;

(ii) for “EEA state” substitute “ United Kingdom ”;

(iii) omit the word “third” before “country concerned”;

(3) Omit subsection (6).

(4) In subsection (7)—

(a) omit the definitions of “EU institution” and “normal insolvency proceedings”;

(b) for the definition of “third-country institution” substitute—

“third-country institution” means an institution established in a country or territory other than the United Kingdom that would, if it were established within the United Kingdom, be regarded as a bank, building society, credit union or investment firm;

(c) for the definition of “third-country parent undertaking” for the words from “has” to the end substitute “ means a parent undertaking, parent financial holding company or a parent mixed financial holding company established in a country or territory outside the United Kingdom; ”;

(d) in the definition of “third-country resolution action”—

(i) in the opening words, for “law of a third country” substitute “ law of a country or territory outside the United Kingdom ” and for “an EU institution” substitute “ a bank, building society, credit union or investment firm, ”;

(ii) in paragraph (a) for “EU institution” substitute “ a bank, building society, credit union or investment firm ”;

(iii) in paragraph (b) for “third country” substitute “ country or territory concerned ”;

(e) omit the definition of “third country”.

42

(1) Section 89I (effect of recognition of third-country resolution action by the Bank of England) is amended as follows.

(2) In subsection (6), in the modified subsection (9A), for “third country” substitute “ country or territory ”;

(3) In subsection (9)—

(a) in the modified subsection (3), after “United Kingdom and the”, for “third-country” substitute “ country or territory ”;

(b) in the modified subsection (3A) for “ “third-country group company” and “third country”” substitute “and “third-country group company””.

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

Resolution of UK branches of third-country institutions

43

Section 89JA (resolution of UK branches of third-country institutions) is amended as follows.

44

In subsection (2)(c) for the words from “meaning” to “directive” substitute “ same meaning as in section 89H ”.

45

(1) The modified version of section 6E substituted by subsection (4) is amended as follows.

(2) In subsection (5) omit the words from “(within” to “directive)”.

(3) After subsection (5) insert—

(5A) In subsection (5)(b) “relevant third-country authority” means an authority in a country or territory outside the United Kingdom that has functions corresponding to the stabilisation powers of the Bank of England, the FCA or the PRA.

(4) For subsection (6) substitute—

(6) The valuation carried out under this section must follow the methodology specified in— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are retained EU law, or (b) technical standards made under subsection 12(a).

(5) In subsection (8) for “third country” substitute “ country or territory outside the United Kingdom ”.

(6) For subsection (11) substitute—

(11) A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the third-country institution in accordance with— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are retained EU law, or (b) technical standards made under subsection (12)(b). (12) The Bank of England may make technical standards relating to— (a) the methodology for assessing the value of the assets and liabilities of a branch for the purposes of a valuation under this section; (b) the methodology for calculating and including a buffer for additional losses in the provisional valuation.

46

(1) The modified version of section 7 substituted by subsection (5) is amended as follows.

(2) In subsection (4)(a) for “EEA” substitute “ UK ”.

(3) In subsection (9) for the definitions of “EEA creditor” and “normal insolvency proceedings” substitute—

“UK creditor”, in relation to a third-country institution, means a creditor of the institution who— (a) in the case of an individual, is ordinarily resident in the United Kingdom; and (b) in the case of a body corporate or unincorporated association, has its head office in the United Kingdom.

47

(1) The modified version of section 7A substituted by subsection (6) is amended as follows.

(2) In paragraph (b), for the words from “European” to “operating)” substitute “ United Kingdom ”;

(3) In paragraph (c)—

(a) for “third country” (in the first place it appears) substitute “ country or territory ”;

(b) for the words “third country (as defined in section 89H(7))” substitute “ country or territory (other than the United Kingdom) ”.

48

(1) The modified version of section 48B substituted by subsection (8) is amended as follows.

(2) In subsection (10)—

(a) in paragraph (f)(ii) for “as referred” to the end substitute “ within the meaning of rule 3 of Part 152 (remuneration) of the PRA rulebook (other than persons deemed by virtue of rule 3.2 not to be material risk takers and notified to the PRA in accordance with rule 3.2). ”;

(b) in paragraph (i), for the words from “Financial Services Compensation” to the end substitute “ the FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) or (4) of the Financial Services and Markets Act 2000 ”.

(3) In subsection (12) omit paragraph (b) (and the “and” before it).

(4) In subsection (14)(c)—

(a) for “an EEA state” substitute “ the United Kingdom ”;

(b) for “micro-enterprises, small enterprises or medium-sized enterprises” substitute “ micro, small and medium-sized enterprises ”.

(5) In subsection (15) for “third country” substitute “ country or territory outside the United Kingdom ”;

(6) In subsection (17)—

(a) at the appropriate place insert—

“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for the third-country institution or its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company);

(b) for the words from “ “micro-enterprise”” to the end substitute—

“micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC.

(7) After subsection (17) insert—

(17A) For the purposes of the definition of “core business lines” Article 7 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of core business lines) applies. (17B) The Treasury may by regulations made by statutory instrument specify criteria for the determination of the business lines and associated services referred to in the definition of “core business lines”. (17C) The power conferred by subsection (16) includes— (a) power to amend or revoke Article 7 of Commission Delegated Regulation (EU) 2016/778; and (b) power to amend or repeal subsection (17A). (17D) A statutory instrument containing regulations under subsection (17B) is subject to annulment in pursuance of a resolution of either House of Parliament.

49

(1) In the Table of further modifications in subsection (11), column 2 is amended as follows.

(2) In the entry relating to section 44C(4), for “ third country)” substitute “ country or territory outside the United Kingdom) ”.

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

(4) In the entry relating to section 60B(4) for “third country” substitute “ country or territory outside the United Kingdom ”;

(5) In the entry relating to section 63(1A) for “third country” substitute “ country or territory outside the United Kingdom ”.

General provisions

50

In section 89K (insolvency proceedings), in subsection (3)(f) for the words from “2.15” to the end substitute “ 4.1(21) of the capital requirements regulation. ”.

Bank Insolvency

51

In section 120A (notice to the regulators and the Bank of England of preliminary steps), in subsection (2) for the words from “2.15” to the end substitute “ 4.1(21) of the capital requirements regulation (within the meaning of section 3). ”.

Payment Systems

52

In section 206B (international obligations), in subsection (1) for “EU obligations or any other” substitute “ any ”.

Miscellaneous provisions

53

In section 251 (financial assistance to building societies), in subsection (1)—

(a) after paragraph (a) insert “ or ”;

(b) omit paragraphs (c) and (d).

General

54

In section 258A (“investment firm”), in subsection (1) at the end insert “ as it forms part of retained EU law”.

55

(1) In section 259 (statutory instruments), in subsection (3), the Table is amended as follows.

(2) After the row relating to the meaning of “bank” insert—

2(2A)	Criteria for determining what are critical functions	Negative resolution

(3) After the row relating to the protection of interests insert—

48B(13A)	Further provision connected with functions under section 48B(10)	Draft affirmative resolution
48B(16)	Criteria for determining what are core business lines	Negative resolution

(4) After the row relating to recognised central counterparty compensation orders insert—

89JA(8) (modified section 48B(17B))	Criteria for determining what are core business lines	Negative resolution

56

(1) In section 261 (index of defined terms), the Table is amended as follows.

(2) For the entry relating to the FSCS substitute—

FSCS (in Part 1)	3
FSCS (in Part 2)	93

(3) At the appropriate place insert—

Normal insolvency proceedings (in Part 1)	3

SCHEDULE 2 — Amendments of other primary legislation

Amendments of the Insolvency Act 1986

1

Schedule 6 to the Insolvency Act 1986 (preferential debts) is amended in accordance with paragraphs 2 and 3.

2

In paragraph 15BB —

(a) in sub-paragraph (a)—

(i) for “non-EEA” substitute “ non-UK ”; and

(ii) for “an EEA state” substitute “ the United Kingdom ”;

(b) in sub-paragraph (b), for “an EEA” substitute “ a UK ”.

3

In paragraph 15C —

(a) in sub-paragraph (3) for paragraph (b) substitute—

(b) any micro, small and medium-sized enterprise, as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission recommendation 2003/361/EC.

(b) in sub-paragraph (4)—

(i) for paragraphs (b) and (c) substitute—

(b) “non-UK branch” means a branch, as defined in Article 4.1(17) of the capital requirements regulation, which is established outside the United Kingdom; (c) “UK branch” means a branch, as so defined, which is established in the United Kingdom,

(ii) at the end, insert “ , as it forms part of retained EU law”.

Amendments of the Financial Services (Banking Reform) Act 2013

4

Paragraph 5 of Schedule 7 to the Financial Services (Banking Reform) Act 2013 (provision that may be made by a financial market infrastructure transfer scheme) is amended as follows—

(a) at the end of sub-paragraph (2)(e), insert the words “ (including under legislation of the European Union) ”; and

(b) in sub-paragraph (2)(f), omit “, EU instrument”.

SCHEDULE 3 — Amendments of the Bank Recovery and Resolution (No.2) Order 2014

Introductory provisions

1

(1) Article 2(1) (interpretation of Order) is amended as follows.

(2) Omit the definition of “another EEA State”.

(3) In the definition of “appropriate regulator” in paragraph (a) for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”.

(4) Omit the definition of “college”.

(5) For the definition of “competent authority” substitute—

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

(6) After the definition of “competent authority” insert—

“conditions for early intervention” means where— (a) an institution infringes the requirements of— (i) the capital requirements regulation; (ii) legislation upon which the United Kingdom relied immediately before IP completion day to meet its obligations with respect to the capital requirements directive; (iii) 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; or (iv) any 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 (b) an institution is likely in the near future to infringe those requirements due, amongst other things, to— (i) a rapidly deteriorating financial condition, including deteriorating liquidity situation; (ii) increasing level of leverage; (iii) non-performing loans; or (iv) 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.

(7) In the definition of “conditions for resolution”—

(a) in paragraph (b) after “Banking Act 2009;” omit “and”;

(b) omit paragraph (c).

(8) In the definition of “the consolidating supervisor” for “an EEA” in each case substitute “ a UK ”.

(9) After the definition of “consolidating supervisor” insert—

“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;

(10) In the definition of “critical functions”—

(a) in paragraph (a) omit “in relation to an undertaking set up in the United Kingdom,” and omit “and”;

(b) omit paragraph (b).

(11) After the definition of “critical functions” insert—

“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;

(12) Omit the definitions of “EBA”, “the EBA Regulation”, “EEA parent financial holding company”, “EEA parent institution”, “EEA parent mixed financial holding company” and “EEA parent undertaking”.

(13) In the definition of “eligible liabilities” —

(a) in paragraph (a) omit “in relation to an undertaking set up in the United Kingdom,”;

(b) omit paragraph (b) (together with the preceding “and”).

(14) After the definition of “eligible liabilities” insert—

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

(15) After the definition of “FSMA” insert—

“group” means a parent undertaking and its subsidiaries;

(16) In the definition of “group entity” for “EEA” substitute “ UK ”.

(17) After the definition of “insolvency proceedings” insert—

“institution” means a credit institution or an investment firm; “instruments of ownership” means— (a) shares, (b) other instruments that confer ownership, (c) instruments that are convertible into, or give the right to acquire, shares or other instruments of ownership, and (d) instruments representing interests in shares or other instruments of ownership; “investment firm” means an investment firm within the meaning of point (2) of Article 4.1 of the capital requirements regulation that is subject to the initial capital requirement laid down in Article 28.2 of the capital requirements directive; “management body” has the meaning given in point (9) of Article 4.1 of the capital requirements regulation;

(18) Omit the following definitions—

(a) “parent financial holding company in an EEA State”,

(b) “parent institution in an EEA State” and

(19) Omit the definition of “relevant competent authority”.

(20) In the definition of “relevant group” for “EEA” substitute “ UK ”.

(21) In the definition of “resolution objectives”—

(a) omit paragraph (a); and

(b) in paragraph (b) for “in relation to the United Kingdom, includes” substitute “ means ”.

(22) After the definition of “resolution plan” insert—

“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;

(23) In the definition of “resolution tools”—

(a) omit paragraph (a); and

(b) in paragraph (b) for the words from the start to “includes the” substitute “ means ”.

(24) After the definition of “resolution tools” insert—

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

(25) In the definition of “third country”—

(a) for “State” substitute “ country or territory ”;

(b) for “an EEA State; and” substitute “ the United Kingdom; ”.

(26) At the end of the paragraph add—

“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;

(27) Omit article 2(2).

(28) In article 2(3)—

(a) in the opening words for “State” substitute “ country or territory ”;

(b) for sub-paragraph (a) substitute—

(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

(29) After article 2(3) insert—

(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 retained EU law.

2

In article 3 (application of Order), in the opening words, for “lays down” substitute “ 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) ”.

Designation of authorities and competent ministry

3

Omit Part 2.

Recovery and resolution planning

4

(1) Article 7 (recovery planning: preparatory steps and simplified obligations) is amended as follows.

(2) In paragraph (3)—

(a) in sub-paragraph (a) for the words from “Section A” to “recovery plans)” substitute “ Schedule A1 ”;

(b) in sub-paragraph (b) for “Section A of that Annex” substitute “ that Schedule ”.

(3) After paragraph (3) insert—

(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) In paragraph (4) for “an EEA” substitute “ a UK ”.

(5) After paragraph (4) insert—

(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.

5

(1) Article 8 (resolution planning: preparatory steps and simplified obligations) is amended as follows.

(2) In paragraph (3)(a) for the words from “information set out in Section B” to “plans)” substitute “ additional information specified in Schedule 2A ”.

(3) After paragraph (3) insert—

(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) In paragraph (4)(a) for the words from “set out in” to “group)” substitute “ provided for in Schedule 2B ”.

6

Omit article 10 (provision of information to EBA).

Assessment of recovery plan drawn up by an institution

7

(1) Article 11 (application and interpretation of Chapter 1 of Part 4) is amended as follows.

(2) In paragraph (1)—

(a) in sub-paragraph (a) for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”;

(b) in sub-paragraph (b) omit the words from “in accordance with” to the end.

8

In article 12 (assessment of plan) omit paragraph (2).

9

(1) Article 13 (criteria for assessment) is amended as follows.

(2) In paragraph (1) for the words from “Articles 5” to “indicators)” substitute “ Schedule A1 ”.

(3) After paragraph (1) insert—

(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.

Assessment of group recovery plan

10

(1) Article 16 (application and interpretation of Chapter 2 of Part 4) is amended as follows.

(2) In paragraph (1) in sub-paragraph (b) omit the words from “in” to the end.

(3) In paragraph (2)—

(a) in the definition of “group institution” for “EEA” substitute “ UK ”;

(b) omit the definition of “UK group entity”.

11

In article 17(1) (duty to transmit a copy of group recovery plan)—

(a) in sub-paragraph (a) at the end insert “ and ”;

(b) omit sub-paragraphs (b) and (c);

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

(d) omit sub-paragraph (e).

12

(1) Article 18 (assessment of group recovery plan) is amended as follows.

(2) In paragraph (1) omit “Where every group institution is a UK authorised person,”.

(3) Omit paragraphs (2) and (3).

(4) In paragraph (4)—

(a) in sub-paragraph (a) omit “or another resolution authority”;

(b) in sub-paragraph (b) for “any EEA State in which a group entity conducts business” substitute “ the United Kingdom ”.

13

(1) Article 19 (purpose of assessment) is amended as follows.

(2) In paragraph (2)—

(a) for the words from “Articles 5” to “indicators)” substitute “ Schedule A1 ”;

(b) in sub-paragraph (b) for “any EEA State” substitute “ the United Kingdom ”.

(3) After paragraph (2) insert—

(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.

14

For article 20 substitute—

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

15

Omit article 21 (joint assessment of plan).

16

(1) Article 22 (revision of plan) is amended as follows.

(2) In paragraphs (1) and (2) for “group entity” in each case substitute “ parent undertaking ”.

(3) In paragraph (2) for “the entity” in both cases substitute “ the undertaking ”.

17

(1) Article 23 (business changes and relevant measures) is amended as follows.

(2) In paragraph (1)(a) for “group entity” substitute “ parent undertaking ”.

(3) In paragraph (1)(b) for “the entity” substitute “ the UK parent undertaking ”.

(4) In paragraph (2)—

(a) in the opening words, omit the words from “Subject to” to “relevant matters,”;

(b) in sub-paragraph (a), for “group entity” substitute “ parent undertaking ”;

18

Omit articles 25 (references to EBA) and 26 (requesting the assistance of the EBA).

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

19

Omit Chapter 3 of Part 4 (assessment of group recovery plan where neither the PRA nor the FCA is the consolidating supervisor).

Review of recovery plans and group recovery plans

20

(1) Article 33 (review of recovery plan) is amended as follows.

(2) In paragraph (1) omit “or 30”.

(3) In paragraph (4) omit “by a competent authority”.

(4) In paragraph (6)—

(a) in sub-paragraph (a)—

(i) omit “is authorised by the PRA or FCA and”;

(ii) for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”; and

(b) in sub-paragraph (b) omit “or 3” and “or 30”.

21

(1) Article 34 (review of group recovery plan assessed under Chapter 2 of Part 4) is amended as follows.

(2) In paragraphs (2) and (3) for “UK group entity” in both cases substitute “ UK parent undertaking ”.

(3) In paragraph (4)—

(a) omit “by a competent authority”; and

(b) for “UK group entity” substitute “ UK parent undertaking ”.

(4) In paragraph (8) omit the definition of “UK group entity”.

22

Omit article 35 (review of group recovery plan assessed under Chapter 3 of Part 4).

Resolution plans for institutions

23

In Article 36 (interpretation of Chapter 1 of Part 5) for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”.

24

(1) Article 37 (the Bank's duty to draw up resolution plans) is amended as follows.

(2) In paragraph (2) for the words from “contain” to the end substitute—

(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).

(3) After paragraph (2) insert—

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

(4) After paragraph (3) insert—

(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.

(5) In paragraph (4)—

(a) in sub-paragraph (a) omit “and”;

(b) omit sub-paragraph (b).

Group resolution plan

25

(1) Article 40 (the Bank's duty to draw up group resolution plans) is amended as follows.

(2) In paragraph (1) omit “Where every group entity is set up in the United Kingdom,”.

(3) Omit paragraph (2).

(4) In paragraph (3) for the words from “contain” to the end substitute—

(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).

(5) After paragraph (3) insert—

(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.

(6) After paragraph (4) insert—

(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.

(7) Omit paragraph (5)(b) and (c).

(8) In paragraph (6) for “any EEA State” substitute “ the United Kingdom ”.

(9) In paragraph (7) for “a resolution authority or competent authority” substitute “ the Bank under Part 1 of the Banking Act 2009 or the PRA or the FCA under FSMA ”.

(10) After paragraph (7) insert—

(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— 1. whether the market share of the branch in terms of deposits exceeds 2% in the third country; 2. 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; 3. 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.

26

(1) Article 41 (information to be transmitted for the purpose of drawing up group resolution plans) is amended as follows.

(2) In paragraph (1)—

(a) in the opening words after “relevant information” insert “ to the appropriate regulator ”;

(b) omit paragraphs (a), (b) and (c).

(3) Omit paragraph (3).

27

Omit articles 42 (joint decision on adoption of group resolution plan), 43 (references to EBA) and 44 (requesting the assistance of EBA).

28

In article 45 (duty to transmit a copy of the group resolution plan) omit “and each relevant competent authority”.

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

29

Omit Chapter 3 of Part 5.

Review of resolution plans and group resolution plans

30

(1) Article 53 (review of resolution plan) is amended as follows.

(2) In paragraph (4)—

(a) in sub-paragraph (a)—

(i) for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”;

(ii) at the end, omit “or”;

(b) omit sub-paragraph (b).

(3) In paragraph (6) in the definition of “resolution plan” omit “, including that Chapter as applied by article 50”.

31

In article 54 (review of group resolution plan drawn up by the Bank), in paragraph (5), in the table—

(a) omit the three rows relating to article 41;

(b) in the final row—

(i) in the first column, for “Articles 42 to 45” substitute “ Article 45 ”;

(ii) in the second column for “Each” substitute “ The ”.

32

Omit article 55 (review of group resolution plan drawn up by another resolution authority).

Information and records for resolution planning

33

(1) Article 58 (records of financial contracts) is amended as follows.

(2) In paragraph (2)—

(a) in sub-paragraph (b) omit “or in another EEA State”; and

(b) in sub-paragraph (c) for “EEA” substitute “ UK ”.

(3) After paragraph (2) insert—

(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).

(4) After paragraph (3) insert—

(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.

Assessment of resolvability of institutions

34

In article 59 (application and interpretation of Chapter 1 of Part 6), in paragraph (2)—

(a) for “take resolution action or” substitute “ apply the resolution tools, exercise resolution powers or take ”; and

(b) for “any EEA State” substitute “ the United Kingdom ”.

35

(1) Article 60 (assessment of resolvability) is amended as follows.

(2) In paragraph (2)—

(a) in sub-paragraph (a) for the words from “Section C” to the end substitute “ Schedule 2B and in any technical standards under paragraph (2A); ”;

(b) in sub-paragraph (d)—

(i) in paragraph (i) omit “; and”;

(ii) omit paragraph (ii).

(3) After paragraph (2) insert—

(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.

(4) In paragraph (4)—

(a) for “take resolution action or” substitute “ apply the resolution tools, exercise resolution powers or take ”;

(b) for “any EEA State” substitute “ the United Kingdom ”.

(5) Omit paragraph (5).

Assessment of resolvability of groups

36

(1) Article 61 (application and interpretation of Chapter 2 of Part 6) is amended as follows.

(2) In paragraph (1)—

(a) in sub-paragraph (a) omit “alone or jointly with other resolution authorities,” and “; or”;

(b) omit sub-paragraph (b).

(3) In paragraph (2)—

(a) for “take resolution action in respect of resolution entities or”, substitute “apply the resolution tools or exercise resolution powers in respect of resolution entities, or take”;

(b) for “any EEA State” substitute “ the United Kingdom ”.

37

(1) Article 62 (assessment of group resolvability where the PRA or FCA is the consolidating supervisor) is amended as follows.

(2) In paragraph (3)—

(a) in sub-paragraph (a) for the words from “Section C” to the end substitute “ Schedule 2B and in any technical standards under paragraph (2A); ”;

(b) omit sub-paragraph (d)(ii) and (iii).

(3) After paragraph (3) insert—

(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) In paragraph (5)—

(a) for “take resolution action in respect of resolution entities or”, substitute “apply the resolution tools or exercise resolution powers in respect of resolution entities, or take”;

(b) for “any EEA State” substitute “ the United Kingdom ”.

(5) Omit paragraphs (6) to (8).

38

Omit article 63 (assessment of group resolvability where neither the PRA nor the FCA is the consolidating supervisor).

Removal of impediments to resolvability of institutions

39

(1) Article 65 (notice of determination) is amended as follows.

(2) In paragraph (1)—

(a) at the end of sub-paragraph (a) add “ and ”;

(b) in sub-paragraph omit “; and”;

40

(1) Article 66 (effect of notice of determination) is amended as follows.

(2) In paragraph (6)(b)—

(a) in paragraph (i) omit “and other EEA States;”;

(b) in paragraph (ii) for “EEA market” substitute “ market in the United Kingdom ”;

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

41

(1) Article 68 (application and interpretation of Chapter 4 of Part 6) is amended as follows.

(2) In paragraph (2)—

(a) in the definition of “group entity”—

(i) in the opening words for “EEA parent undertaking” substitute “ UK parent undertaking ”; and

(ii) in paragraph (c) omit “either” and sub-paragraph (i);

(b) in the definition of “measures for structural change”, in paragraph (b), for “a parent financial holding company in an EEA State or an EEA” substitute “ a UK ”.

42

(1) Article 69 (report on substantive impediments to the resolvability of group entities) is amended as follows.

(2) In paragraph (1) omit “EBA and” and “and after consulting the relevant competent authorities”.

(3) For paragraph (2) substitute—

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

43

(1) Article 70 (suspension of requirement to draw up or review group resolution plan) is amended as follows.

(2) In paragraph (1) omit “Where every group entity is set up in the United Kingdom,”.

(3) Omit paragraphs (2) and (3).

44

(1) Article 71 (determining remedial measures) is amended as follows.

(2) In paragraph (1) for “EEA” substitute “ UK ”.

(3) In paragraph (2) for “each of the authorities to which it submitted its report” substitute “ the appropriate regulator ”.

(4) In paragraph (3) omit “Where every group entity is set up in the United Kingdom,”.

(5) Omit paragraph (4).

(6) In paragraph (6)(b)—

(a) in paragraph (i) omit “and other EEA States;”;

(b) in paragraph (ii) for “EEA market” substitute “ market in the United Kingdom ”;

(7) In paragraph (7) omit “or (4)”.

45

Omit articles 72 (joint decision on impediments to group resolvability and remedial measures), 73 (references to EBA) and 74 (requesting the assistance of EBA).

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

46

Omit Chapter 5 of Part 6.

Authorisation of agreement for group financial support

47

(1) Article 83 (application and interpretation of Chapter 1 of Part 7) is amended as follows.

(2) In paragraph (1) in sub-paragraph (b) for “EEA” substitute “ UK ”.

(3) In paragraph (2)—

(a) omit the definition of “conditions for early intervention”;

(b) for the definition of “conditions for financial support” substitute—

“conditions for financial support” means the following conditions— (a) there is a reasonable prospect that the financial support provided significantly redresses the financial difficulties of the group entity receiving the financial support; (b) 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; (c) the financial support is provided on terms, including consideration, in accordance with Article 19.7 of the recovery and resolution directive; (d) 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; (e) 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; (f) the provision of the financial support would not jeopardise the liquidity or solvency of the group entity providing the financial support; (g) the provision of the financial support would not create a threat to financial stability in the United Kingdom; (h) the group entity providing the financial support complies, at the time the financial support is provided, with— (i) 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; and (ii) the 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; (i) the provision of the financial support would not undermine the resolvability of the group entity providing the financial support.

(c) in the definition of “group financial support agreement”, in paragraph (b), for the words from “other” to the end substitute “ , other than the United Kingdom, in which the relevant parent undertaking is set up ”;

(d) in the definition of “relevant parent undertaking” for “parent institution in an EEA State, an EEA” substitute “ UK ”.

(4) After paragraph (2) insert—

(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.

48

(1) Article 84 (review of group financial support agreement and decision on authorisation) is amended as follows.

(2) In paragraph (1) for “authorities” substitute “ authority ”.

(3) In paragraph (3) for the words from “any EEA State” to the end substitute “ the United Kingdom ”.

49

In article 85 (duty to transmit a copy of application), in paragraph (1), for “each” substitute “ any ”.

50

Omit 86 (joint decision with other competent authorities), 87 (references to EBA) and 88 (requesting the assistance of EBA).

51

In article 89 (duty to transmit a copy of authorised agreement) omit the words from “and to” to the end.

52

(1) Article 90 (amendment of authorised agreement) is amended as follows.

(2) In paragraph (2) for “EEA” substitute “ UK ”.

Authorisation of agreement for group financial support where neither the PRA nor the FCA is the consolidating supervisor

53

Omit Chapter 2 of Part 7.

Approval of authorised agreements by the members of a UK group entity

54

(1) Article 97 (interpretation of Chapter 3 of Part 7) is amended as follows.

(2) In the definition of “authorised agreement”—

(a) for “, FCA or other competent authority” substitute “ or FCA ”; and

(b) for “by the competent authority” substitute “ by the PRA or FCA ”.

55

After article 98 insert—

(98A) The PRA and the FCA may each make technical standards relating to the form and content of any description of entry into a group financial support agreement which the directors of a UK group entity are required to publish by rules made by the PRA or the FCA under Part 9A of FSMA.

Provision of group financial support

56

(1) Article 101 (interpretation of Chapter 4 of Part 7) is amended as follows.

(2) In paragraph (1)—

(a) after “In this Chapter—” insert—

“authorised agreement” has the same meaning as in Chapter 3;

(b) omit the definition of “college members”;

(d) for the definition of “relevant notice” substitute—

“relevant notice” means a notice— (a) given by a group entity; (b) stating an intention to provide financial support under an authorised agreement; and (c) required by rules made by the PRA or FCA under Part 9A of FSMA;

57

(1) Article 102 (relevant notice from UK group entity: decision by the PRA or FCA) is amended as follows.

(2) In paragraph (2)—

(a) at the end of sub-paragraph (a) add “ and ”;

(b) omit sub-paragraph (b).

(3) After paragraph (3) insert—

(4) In this article “business day” has the same meaning as in section 70D(1) of the Banking Act 2009 .

58

(1) Article 103 (duties of consolidating supervisor where financial support agreed, prohibited or restricted) is amended as follows.

(2) Omit paragraphs (2) and (5).

59

Omit articles 104 (re-assessment of recovery plans by the PRA or FCA where it is not the consolidating supervisor) and 105 (requesting the assistance of EBA).

Early intervention with respect to an institution

60

(1) Article 107 (interpretation of Chapter 1 of Part 8) is amended as follows.

(2) In the definition of “measure for early intervention”—

(a) after “means a” insert “ relevant ”;

(b) for the words from “referred to” to the end substitute “ for early intervention ”.

(3) In the definition of “relevant institution” for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”.

(4) After the definition of “relevant institution” insert—

“relevant measure” means a measure— (a) requiring an institution to— (i) implement one or more of the arrangements or measures set out in the recovery plan; or (ii) review and (if appropriate) amend a recovery plan in accordance with article 33 when the circumstances that led to early intervention are different from the assumptions set out in the initial recovery plan and implement one or more of the arrangements or measures set out in the updated plan within a specified timeframe and to ensure that the conditions referred to in the introductory phase no longer apply; (b) requiring the management body of an institution to examine the situation, identify measures to overcome any problems identified and draw up an action programme to overcome those problems and a timetable for its implementation; (c) requiring the management body of an institution to convene, or, if the management body fails to comply with the requirement, to convene directly, a meeting of shareholders of the institution, and in both cases setting the agenda and requiring certain decisions to be considered for adoption by the shareholders; (d) requiring any person to be removed or replaced if an approval is withdrawn from that person under section 63 of FSMA; (e) requiring the management body of an institution to draw up a plan for negotiation on restructuring of debt with some or all of its creditors in accordance with any recovery plan; (f) requiring changes to the institution's business strategy; (g) requiring changes to the legal or operational structures of the institution; or (h) acquiring (including through on-site inspections) and providing to the Bank all the information necessary to update the resolution plan and preparing for the possible resolution of the institution and for valuation of the assets and liabilities of the institution in accordance with section 6E or 48X of the Banking Act 2009 .

61

(1) Article 108 (notice that institution meets the conditions for early intervention) is renumbered as paragraph (1) of that article.

(2) After paragraph (1) as so renumbered, insert—

(2) The PRA and the FCA may each make technical standards relating to the circumstances in which a relevant institution may be taken as meeting the conditions for early intervention.

Early intervention with respect to groups where the PRA or FCA is the consolidating supervisor

62

(1) Article 110(2) (application and interpretation of Chapter 2 of Part 8) is amended as follows.

(2) In the definition of “measure for early intervention”—

(a) in paragraph (a) omit “in relation to a UK group entity,”;

(b) omit paragraph (b).

(3) Omit the definition of “non-UK group entity”.

(4) In the definition of “temporary manager” omit paragraph (b).

(5) In the definition of “UK group entity”, in paragraph (a)—

(a) for “EEA” substitute “ UK ”;

(b) omit “, if it is set up in the United Kingdom”.

63

(1) Article 111 (procedure for early intervention in respect of a UK group entity) is amended as follows.

(2) In paragraph (2) omit the words from “, the relevant” to the end.

(3) Omit paragraph (3).

(4) In paragraph (4) for “recipients of a notice given under paragraph (2)” substitute “ Bank ”.

(5) In paragraph (6) for “EEA” substitute “ UK ”.

64

Omit articles 112 (procedure for early intervention in respect of a non-UK group entity), 113 (joint decisions about early intervention), 114 (references to EBA) and 115 (requesting the assistance of EBA).

Early intervention with respect to groups where neither the PRA nor the FCA is the consolidating supervisor

65

Omit Chapter 3 of Part 8.

Minimum requirement for own funds and eligible liabilities: determination of minimum requirement for an institution

66

In article 121 (interpretation of Chapter 1 of Part 9), in paragraph (1)—

(a) before the definition of “relevant institution” insert—

“covered bond” means a regulated covered bond within the meaning of regulation 1(2) of the Regulated Covered Bonds Regulations 2008 ; and;

(b) in the definition of “relevant institution” for “Article 111 of the capital requirements directive” substitute “ Part 6 of the Capital Requirements Regulations 2013 ”.

67

In article 122 (duties of the Bank of England in relation to minimum requirement), omit paragraph (2).

68

(1) Article 123 (determination of minimum requirement) is amended as follows.

(2) In paragraph (6)—

(a) in sub-paragraph (d), omit the final “and”;

(b) at the end of sub-paragraph (e) insert—

and (f) relevant assessment criteria specified in any Commission Regulation containing regulatory technical standards adopted by the European Commission under Article 45.2 of the recovery and resolution directive, so far as they are retained EU law.

(3) After paragraph (7) insert—

(8) The Bank may make technical standards relating to assessment criteria upon which it must base a determination of the minimum requirement for own funds and eligible liabilities under this article, article 126 or article 135.

Determination of minimum consolidated requirement where the PRA or FCA is the consolidating supervisor

69

(1) Article 125 (application and interpretation of Chapter 2 of Part 9) is amended as follows.

(2) In paragraph (2)—

(a) omit the definition of “four month period”;

(b) in the definition of “group entity” for “EEA” substitute “ UK ”;

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