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

CHAPTER 3 U.K. Assessment of business reorganisation plan drawn up for relevant group where the PRA or FCA is the consolidating supervisor

Application and interpretation of Chapter 3 U.K.

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

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

(b) a relevant bail-in power has been exercised in respect of two or more group entities; and

(c) a group entity submits a business reorganisation plan to the Bank for assessment in accordance with [F1 section 48H of the Banking Act 2009 (including that section as applied in consequence of the provision made by section 81BA, 83A, 84 or 89A of that Act)].

(2) In this Chapter—

F2 ...

“four month period” means four months beginning with the date on which the Bank [F3 receives the business reorganisation plan under paragraph (1)(c)];

“group institution” means—

(a)

the [F4 UK] parent undertaking, if it is an institution;

(b)

a group subsidiary which is an institution;

“impediment”, in relation to the business reorganisation plan, means any material deficiency or measure in the plan which would impede its implementation or the object of restoring the long-term viability of any group entity (or of part of its business) or of the whole or part of the relevant group;

[F5 “relevant bail-in power” in relation to a group entity means the power in section 12A(2) of the Banking Act 2009;]

“the regulator”—

(a)

where there is a PRA-authorised person and any other UK authorised person in the relevant group, means the PRA and the FCA;

(b)

where there is a PRA-authorised person and no other UK authorised person in the relevant group, means the PRA;

(c)

where there is no PRA-authorised person in the relevant group, means the FCA;

“relevant matters”, in relation to the assessment of the business reorganisation plan, means the following matters for decision—

(a)

whether the plan meets the criteria for assessment;

(b)

whether group entities should be required to draw up and submit business reorganisation plans on an individual basis;

(c)

whether the plan contains an impediment;

(d)

whether a group entity should be required to revise the plan;

(e)

whether an impediment has been adequately addressed in a revision of the plan; and

(f)

where an impediment has not been adequately addressed in a revision of the plan, how it can be adequately addressed by directing a group entity to make specific changes to the plan; and

F6 ...

Textual Amendments

F1 Words in art. 165(1)(c) substituted (31.12.2020) by The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 95(2); 2020 c. 1, Sch. 5 para. 1(1)

F2 Words in art. 165(2) omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 95(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in art. 165(2) substituted (31.12.2020) by The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 95(3)(b); 2020 c. 1, Sch. 5 para. 1(1)

F4 Word in art. 165(2) substituted (31.12.2020) by The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 95(3)(c); 2020 c. 1, Sch. 5 para. 1(1)

F5 Words in art. 165(2) substituted (31.12.2020) by The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 95(3)(d); 2020 c. 1, Sch. 5 para. 1(1)

F6 Words in art. 165(2) omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 95(3)(e); 2020 c. 1, Sch. 5 para. 1(1)

Duty to transmit a copy of business reorganisation plan U.K.

F7 166.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7 Art. 166 omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 96; 2020 c. 1, Sch. 5 para. 1(1)

Assessment of business reorganisation plan U.K.

167.—(1) F8 ... The Bank must assess the business reorganisation plan jointly with the regulator.

F9 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F8 Words in art. 167(1) omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 97(2); 2020 c. 1, Sch. 5 para. 1(1)

F9 Art. 167(2)(3) omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 97(3); 2020 c. 1, Sch. 5 para. 1(1)

Purpose of assessment U.K.

168.—(1) The purpose of the assessment of the business reorganisation plan is to determine whether the plan meets the criteria for assessment and decide other relevant matters.

(2) The Bank must approve the plan when the Bank and the regulator F10 ... are satisfied that the plan meets the criteria for assessment.

(3) The criteria for assessment are that—

[F11 (a) the plan must include the details specified in section 48H(2) of the Banking Act 2009;]

F12 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) the arrangements proposed in the plan would, if implemented, be reasonably likely to restore the long-term viability of the group entities, or parts of the business of the group entities, in respect of which a relevant bail-in power has been exercised and of the whole or part of the relevant group.

[F13 (d) the arrangements proposed in the plan must be based on realistic assumptions as to the economic and financial market conditions under which the group entities will operate;

(e) the plan must take account of the current state of the financial markets and their future prospects, reflecting best-case and worst-case assumptions, including a combination of events allowing the identification of the group entities' main vulnerabilities; and

(f) the assumptions made in the plan must be compared with appropriate sector-wide benchmarks.]

Textual Amendments

F10 Words in art. 168(2) omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 98(2); 2020 c. 1, Sch. 5 para. 1(1)

F11 Art. 168(3)(a) substituted (31.12.2020) by The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 98(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F12 Art. 168(3)(b) omitted (31.12.2020) by virtue of The State Aid (Revocations and Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1470), reg. 1(2), Sch. 2 para. 15(3) (with Sch. 3)

F13 Art. 168(3)(d)-(f) inserted (31.12.2020) by The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 98(3)(b); 2020 c. 1, Sch. 5 para. 1(1)

Assessment of plan where every group entity is set up in the United Kingdom U.K.

169.  Where the Bank assesses the business reorganisation plan jointly with the regulator, the assessment must be concluded within the four month period.

Joint assessment of plan U.K.

F14 170.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F14 Art. 170 omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 99; 2020 c. 1, Sch. 5 para. 1(1)

Revision of plan U.K.

171.  The Bank—

(a) must notify a F15 ... group entity if the business reorganisation plan is found on assessment to contain an impediment; and

(b) may not require a F15 ... group entity to revise the plan without giving it an opportunity to state its opinion on that requirement.

(2) If the Bank requires a F15 ... group entity to revise the plan, the Bank—

(a) must allow two weeks for the preparation of a plan which demonstrates that the impediment has been addressed;

(b) within one week beginning with the date on which a revised plan is submitted, must notify the entity whether the impediment has been adequately addressed in the revised plan; and

(c) if the impediment has not been adequately addressed in the revised plan, must direct the entity to make specific changes to the plan.

Textual Amendments

F15 Word in art. 171 omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 100(2); 2020 c. 1, Sch. 5 para. 1(1)

Assessment of business reorganisation plans drawn up on an individual basis U.K.

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

References to EBA U.K.

F16 173.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F16 Art. 173 omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 101; 2020 c. 1, Sch. 5 para. 1(1)

Requesting the assistance of EBA U.K.

F17 174.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F17 Art. 174 omitted (31.12.2020) by virtue of The Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1394), reg. 1(2), Sch. 3 para. 101; 2020 c. 1, Sch. 5 para. 1(1)