Sch. 2 para. 7 in force at 31.12.2014 by S.I. 2014/3160, art. 2(1)(b)

http://www.legislation.gov.uk/ukpga/2013/33/schedule/2/paragraph/7/2014-12-31Financial Services (Banking Reform) Act 2013An Act to make further provision about banking and other financial services, including provision about the Financial Services Compensation Scheme; to make provision for the amounts owed in respect of certain deposits to be treated as a preferential debt on insolvency; to make further provision about payment systems and securities settlement systems; to make provision about the accounts of the Bank of England and its wholly owned subsidiaries; to make provision in relation to persons providing claims management services; and for connected purposes.texttext/xmlenStatute Law Database2024-09-06Expert Participation2014-12-31SCHEDULESSCHEDULE 2Bail-in stabilisation optionPART 1Amendments of Banking Act 2009Groups71

After section 81B insert—

81BABail-in option1

The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12A(2) if the following conditions are met.

2

Condition 1 is that the PRA is satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of a bank in the same group.

3

Condition 2 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in—

a

the stability of the financial systems of the United Kingdom,

b

the maintenance of public confidence in the stability of those systems,

c

the protection of depositors, or

d

the protection of any client assets that may be affected.

4

Condition 3 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

5

Before determining whether Condition 2 is met, and if so how to react, the Bank of England must consult—

a

the Treasury,

b

the PRA, and

c

the FCA.

6

In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

2

After section 81C insert—

81CASection 81BA: supplemental1

This section applies where the Bank of England has power under section 81BA to exercise a stabilisation power in respect of a banking group company.

2

The provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 and 8A) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.

3

Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“the bank”)—

a

the provisions in this Act relating to resolution instruments are to be read in accordance with the general rule in subsection (4), but

b

that is subject to the modifications in subsection (5);

and provisions in this Act and any other enactment are to be read with any modifications that may be necessary as a result of paragraphs (a) and (b).

4

The general rule is that the provisions in this Act relating to resolution instruments (including supplemental resolution instruments) are to be read (so far as the context permits)—

a

as applying in relation to the bank as they apply in relation to the parent undertaking, and

b

so, in particular, as allowing any provision that may be made in a resolution instrument in relation to the parent undertaking to be made (also or instead) in relation to the bank.

5

Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“the bank”)—

a

section 41A (transfer of property subsequent to resolution instrument) applies as if the reference in subsection (2) to the bank were to the parent undertaking, the bank and any other bank which is or was in the same group;

b

section 48V (onward transfer)—

i

applies as if the references in subsection (3) to “the bank” included the bank, the parent undertaking and any other bank which is or was in the same group, and with the omission of subsection (4) of that section, and

ii

is to be read as permitting the transfer of securities only if they are held by (or for the benefit of) the parent undertaking or a subsidiary company of the parent undertaking;

c

section 48W (reverse transfer) applies as if the references in subsections (2) and (3) to “the bank” included the bank, the parent undertaking and any other bank which is or was in the same group.

6

Where section 48B (special bail-in provision) applies in accordance with subsection (4) (so that section 48B applies in relation to the bank mentioned in section 81BA(2) as it applies in relation to the parent undertaking mentioned in subsection (3)), the provision that may be made in accordance with section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes provision replacing a liability (of any form) of that bank with a security (of any form or class) of the parent undertaking.

7

Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2)—

a

section 214B of the Financial Services and Markets Act 2000 (contribution to costs of special resolution regime) applies, and

b

the reference in subsection (1)(b) of that section to the bank, and later references in that section, are treated as including references to any other bank which is a subsidiary undertaking of the parent undertaking (but not the parent undertaking itself).

3

In section 81D (interpretation: “banking group company” etc)—

a

in subsection (6), for “, 81C” substitute “ to 81CA ”;

b

in subsection (7) for “section 81B” substitute “ sections 81B to 81CA ”.

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<hcontainer name="schedule" eId="schedule-2" period="#period4">
<num>SCHEDULE 2</num>
<heading>Bail-in stabilisation option</heading>
<part eId="schedule-2-part-1" period="#period4">
<num>
<strong>PART 1</strong>
</num>
<heading>Amendments of Banking Act 2009</heading>
<hcontainer name="crossheading" eId="schedule-2-part-1-crossheading-groups" period="#period1">
<heading>
<em>Groups</em>
</heading>
<paragraph eId="schedule-2-paragraph-7" period="#period1">
<num>
<noteRef href="#key-9126a14f22993ee75887777c226cdda4" marker="I1" class="commentary I"/>
7
</num>
<subparagraph eId="schedule-2-paragraph-7-1">
<num>1</num>
<content>
<p>After section 81B insert—</p>
<p class="BlockAmendment">
<mod>
<quotedStructure class="primary unknown main default" startQuote="" endQuote="">
<section eId="d4e170">
<num>81BA</num>
<heading>Bail-in option</heading>
<subsection eId="d4e174">
<num>1</num>
<content>
<p>The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12A(2) if the following conditions are met.</p>
</content>
</subsection>
<subsection eId="d4e180">
<num>2</num>
<content>
<p>Condition 1 is that the PRA is satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of a bank in the same group.</p>
</content>
</subsection>
<subsection eId="d4e186">
<num>3</num>
<intro>
<p>Condition 2 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in—</p>
</intro>
<paragraph eId="d4e192">
<num>a</num>
<content>
<p>the stability of the financial systems of the United Kingdom,</p>
</content>
</paragraph>
<paragraph eId="d4e198">
<num>b</num>
<content>
<p>the maintenance of public confidence in the stability of those systems,</p>
</content>
</paragraph>
<paragraph eId="d4e204">
<num>c</num>
<content>
<p>the protection of depositors, or</p>
</content>
</paragraph>
<paragraph eId="d4e210">
<num>d</num>
<content>
<p>the protection of any client assets that may be affected.</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e216">
<num>4</num>
<content>
<p>Condition 3 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.</p>
</content>
</subsection>
<subsection eId="d4e222">
<num>5</num>
<intro>
<p>Before determining whether Condition 2 is met, and if so how to react, the Bank of England must consult—</p>
</intro>
<paragraph eId="d4e228">
<num>a</num>
<content>
<p>the Treasury,</p>
</content>
</paragraph>
<paragraph eId="d4e234">
<num>b</num>
<content>
<p>the PRA, and</p>
</content>
</paragraph>
<paragraph eId="d4e240">
<num>c</num>
<content>
<p>the FCA.</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e246">
<num>6</num>
<content>
<p>In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.</p>
</content>
</subsection>
</section>
</quotedStructure>
</mod>
</p>
</content>
</subparagraph>
<subparagraph eId="schedule-2-paragraph-7-2">
<num>2</num>
<content>
<p>After section 81C insert—</p>
<p class="BlockAmendment">
<mod>
<quotedStructure class="primary unknown main default" startQuote="" endQuote="">
<section eId="d4e262">
<num>81CA</num>
<heading>Section 81BA: supplemental</heading>
<subsection eId="d4e266">
<num>1</num>
<content>
<p>This section applies where the Bank of England has power under section 81BA to exercise a stabilisation power in respect of a banking group company.</p>
</content>
</subsection>
<subsection eId="d4e272">
<num>2</num>
<content>
<p>The provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 and 8A) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.</p>
</content>
</subsection>
<subsection eId="d4e278">
<num>3</num>
<intro>
<p>
Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“
<term refersTo="#term-the-bank">the bank</term>
”)—
</p>
</intro>
<paragraph eId="d4e287">
<num>a</num>
<content>
<p>the provisions in this Act relating to resolution instruments are to be read in accordance with the general rule in subsection (4), but</p>
</content>
</paragraph>
<paragraph eId="d4e293">
<num>b</num>
<content>
<p>that is subject to the modifications in subsection (5);</p>
</content>
</paragraph>
<wrapUp>
<p>and provisions in this Act and any other enactment are to be read with any modifications that may be necessary as a result of paragraphs (a) and (b).</p>
</wrapUp>
</subsection>
<subsection eId="d4e301">
<num>4</num>
<intro>
<p>The general rule is that the provisions in this Act relating to resolution instruments (including supplemental resolution instruments) are to be read (so far as the context permits)—</p>
</intro>
<paragraph eId="d4e307">
<num>a</num>
<content>
<p>as applying in relation to the bank as they apply in relation to the parent undertaking, and</p>
</content>
</paragraph>
<paragraph eId="d4e313">
<num>b</num>
<content>
<p>so, in particular, as allowing any provision that may be made in a resolution instrument in relation to the parent undertaking to be made (also or instead) in relation to the bank.</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e319">
<num>5</num>
<intro>
<p>
Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“
<term refersTo="#term-the-bank">the bank</term>
”)—
</p>
</intro>
<paragraph eId="d4e328">
<num>a</num>
<content>
<p>section 41A (transfer of property subsequent to resolution instrument) applies as if the reference in subsection (2) to the bank were to the parent undertaking, the bank and any other bank which is or was in the same group;</p>
</content>
</paragraph>
<paragraph eId="d4e334">
<num>b</num>
<intro>
<p>section 48V (onward transfer)—</p>
</intro>
<subparagraph eId="d4e340">
<num>i</num>
<content>
<p>applies as if the references in subsection (3) to “the bank” included the bank, the parent undertaking and any other bank which is or was in the same group, and with the omission of subsection (4) of that section, and</p>
</content>
</subparagraph>
<subparagraph eId="d4e346">
<num>ii</num>
<content>
<p>is to be read as permitting the transfer of securities only if they are held by (or for the benefit of) the parent undertaking or a subsidiary company of the parent undertaking;</p>
</content>
</subparagraph>
</paragraph>
<paragraph eId="d4e352">
<num>c</num>
<content>
<p>section 48W (reverse transfer) applies as if the references in subsections (2) and (3) to “the bank” included the bank, the parent undertaking and any other bank which is or was in the same group.</p>
</content>
</paragraph>
</subsection>
<subsection eId="d4e358">
<num>6</num>
<content>
<p>Where section 48B (special bail-in provision) applies in accordance with subsection (4) (so that section 48B applies in relation to the bank mentioned in section 81BA(2) as it applies in relation to the parent undertaking mentioned in subsection (3)), the provision that may be made in accordance with section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes provision replacing a liability (of any form) of that bank with a security (of any form or class) of the parent undertaking.</p>
</content>
</subsection>
<subsection eId="d4e364">
<num>7</num>
<intro>
<p>Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2)—</p>
</intro>
<paragraph eId="d4e370">
<num>a</num>
<content>
<p>section 214B of the Financial Services and Markets Act 2000 (contribution to costs of special resolution regime) applies, and</p>
</content>
</paragraph>
<paragraph eId="d4e376">
<num>b</num>
<content>
<p>the reference in subsection (1)(b) of that section to the bank, and later references in that section, are treated as including references to any other bank which is a subsidiary undertaking of the parent undertaking (but not the parent undertaking itself).</p>
</content>
</paragraph>
</subsection>
</section>
</quotedStructure>
</mod>
</p>
</content>
</subparagraph>
<subparagraph eId="schedule-2-paragraph-7-3">
<num>3</num>
<intro>
<p>
In section 81D (interpretation: “banking group company”
<abbr title="Et cetera" xml:lang="la">etc</abbr>
)—
</p>
</intro>
<paragraph eId="schedule-2-paragraph-7-3-a">
<num>a</num>
<content>
<p>
in subsection (6), for “, 81C” substitute
<mod>
<quotedText>“ to 81CA ”</quotedText>
</mod>
;
</p>
</content>
</paragraph>
<paragraph eId="schedule-2-paragraph-7-3-b">
<num>b</num>
<content>
<p>
in subsection (7) for “section 81B” substitute
<mod>
<quotedText>“ sections 81B to 81CA ”</quotedText>
</mod>
.
</p>
</content>
</paragraph>
</subparagraph>
</paragraph>
</hcontainer>
</part>
</hcontainer>
</hcontainer>
</portionBody>
</portion>
</akomaNtoso>