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

PART 7 U.K. Intra-group financial support

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

Application and interpretation of Chapter 1 U.K.

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

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

(b) the PRA or FCA (or each of them) receives from the [F1 UK] parent undertaking an application for authorisation of a group financial support agreement (“the application”).

(2) In this Chapter—

F2 ...

[F3 “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.]

“financial support” includes—

(a)

a loan, a guarantee, the provision of assets for use as collateral or any combination of these forms of support; and

(b)

provision for support (in any form) in one or more transactions or in a transaction entered into by the group institution which is the intended recipient of the support and any other person;

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

“group financial support agreement” means an agreement—

(a)

which is proposed for the provision of financial support to a group institution which, at any time after the agreement has been concluded, meets the conditions for early intervention; and

(b)

the parties to which include a relevant parent undertaking and one or more group subsidiaries set up in any country [F4 , other than the United Kingdom, in which the relevant parent undertaking is set up];

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

“group subsidiary” means an undertaking which is—

(a)

a subsidiary of a relevant parent undertaking; and

(b)

an institution or financial institution;

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

“relevant parent undertaking” means a [F5 UK] parent institution, a financial holding company, a mixed financial holding company or a mixed activity holding company.

[F6 (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.]

Textual Amendments

F1 Word in art. 83(1)(b) 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. 47(2); 2020 c. 1, Sch. 5 para. 1(1)

F2 Words in art. 83(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. 47(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in art. 83(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. 47(3)(b) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 10(c)(ii)); 2020 c. 1, Sch. 5 para. 1(1)

F4 Words in art. 83(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. 47(3)(c); 2020 c. 1, Sch. 5 para. 1(1)

F5 Word in art. 83(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. 47(3)(d); 2020 c. 1, Sch. 5 para. 1(1)

F6 Art. 83(2A) 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. 47(4); 2020 c. 1, Sch. 5 para. 1(1)

Review of group financial support agreement and decision on authorisation U.K.

84.—(1) The appropriate regulator must review the group financial support agreement jointly with the relevant competent [F7 authority].

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

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

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

(3) The matter referred to in paragraph (2)(a) is to be determined having regard to the potential impact of the agreement, if it is concluded, on the financial stability of [F8 the United Kingdom].

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

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

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

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

Textual Amendments

F7 Word in art. 84(1) 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. 48(2); 2020 c. 1, Sch. 5 para. 1(1)

F8 Words in art. 84(3) 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. 48(3); 2020 c. 1, Sch. 5 para. 1(1)

Duty to transmit a copy of application U.K.

85.—(1) The appropriate regulator must send a copy of the application or, where paragraph (2) has effect in relation to any information, of the application without that information, without delay to [F9 any] relevant competent authority.

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

Textual Amendments

F9 Word in art. 85(1) 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. 49; 2020 c. 1, Sch. 5 para. 1(1)

Joint decision with other competent authorities U.K.

F10 86.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10 Art. 86 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. 50; 2020 c. 1, Sch. 5 para. 1(1)

References to EBA U.K.

F11 87.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F11 Art. 87 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. 50; 2020 c. 1, Sch. 5 para. 1(1)

Requesting the assistance of EBA U.K.

F12 88.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F12 Art. 88 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. 50; 2020 c. 1, Sch. 5 para. 1(1)

Duty to transmit a copy of authorised agreement U.K.

89.  The appropriate regulator must send a copy of the group financial support agreement, if it is authorised, to the Bank F13 ....

Textual Amendments

F13 Words in art. 89 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. 51; 2020 c. 1, Sch. 5 para. 1(1)

Amendment of authorised agreement U.K.

90.—(1) This article applies where—

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

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

(2) If the [F14 UK] parent undertaking submits to the appropriate regulator an application for authorisation of the amendment (“the amendment application”), the appropriate regulator must treat the amendment application as if it were an application for authorisation of a group financial support agreement.

(3) Articles 84 to 89 apply for that purpose, but have effect in relation to the amendment application as if—

(a) each reference to a group financial support agreement were a reference to the amendment set out in the amendment application; and

(b) each reference to the application were a reference to the amendment application.

Textual Amendments

F14 Word in art. 90(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. 52(2); 2020 c. 1, Sch. 5 para. 1(1)

F15 CHAPTER 2 U.K. Authorisation of agreement for group financial support where neither the PRA nor the FCA is the consolidating supervisor

Textual Amendments

F15 Pt. 7 Ch. 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. 53; 2020 c. 1, Sch. 5 para. 1(1)

Application and interpretation of Chapter 2 U.K.

F15 91.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Review of group financial support agreement and decision on authorisation U.K.

F15 92.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Joint decision with other competent authorities U.K.

F15 93.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA U.K.

F15 94.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA U.K.

F15 95.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amendment of authorised agreement U.K.

F15 96.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 3 U.K. Approval of authorised agreements by the members of a UK group entity

Interpretation of Chapter 3 U.K.

97.—(1) In this Chapter—

“authorised agreement” means a group financial support agreement (within the meaning given in Chapter 1) authorised by the PRA [F16 or FCA], and includes any amendment authorised [F17 by the PRA or FCA];

“director” includes—

(a)

a director of a company;

(b)

a member of a limited liability partnership; and

(c)

a director of a building society established under the Building Societies Act 1986 M1 ;

“member” includes—

(a)

a shareholder of a company;

(b)

a member of a limited liability partnership; and

(c)

a shareholding or borrowing member of a building society established under the Building Societies Act 1986 (“shareholding member” and “borrowing member” have the meaning given in paragraph 5(2) of Schedule 2 to that Act);

“ordinary resolution”—

(a)

in relation to a resolution passed at a meeting on a show of hands, means a resolution passed by a simple majority of the votes cast by those entitled to vote;

(b)

in relation to a resolution passed on a poll taken at a meeting, means a resolution passed by members representing a simple majority of the total voting rights of the members who (being entitled to do so) vote on the resolution;

(c)

in relation to a written resolution, means a resolution passed by members representing a simple majority of the total voting rights of those eligible to vote on a written resolution; and

“UK group entity”, in relation to an authorised agreement, means—

(a)

the relevant parent undertaking, if it is set up in the United Kingdom;

(b)

a group subsidiary set up in the United Kingdom.

(2) In this article, for the interpretation of “UK group entity”, the expressions “group subsidiary” and “relevant parent undertaking” have the meaning given in Chapter 1.

Textual Amendments

F16 Words in art. 97 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. 54(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F17 Words in art. 97 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. 54(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

Marginal Citations

M1 1986 c. 53.

Requirement for approval of authorised agreement U.K.

98.—(1) An authorised agreement entered into by a UK group entity is only valid in respect of that entity if its members have approved the agreement in accordance with this article.

(2) An authorised agreement is deemed to be approved by the members of a UK group entity if an ordinary resolution approving the agreement is passed by the members—

(a) present and voting either in person or by proxy at a meeting; or

(b) by way of a written resolution proposed by the directors of the entity.

(3) An ordinary resolution may not be passed unless the directors of the entity make available to its members a memorandum setting out the proposed resolution and the terms of the authorised agreement—

(a) in the case of a written resolution, by sending the memorandum to every member at or before the time at which the proposed resolution is submitted to the members;

(b) in the case of a resolution at a meeting, by making the memorandum available for inspection by the members—

(i) at the entity's registered office for not less than fifteen days ending with the date of the meeting; and

(ii) at the meeting itself.

[F18 Publication of information concerning group financial support agreements U.K.

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.]

Textual Amendments

F18 Art. 98A 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. 55; 2020 c. 1, Sch. 5 para. 1(1)

Revocation of authorised agreement U.K.

99.—(1) This article applies where a UK group entity has entered into an authorised agreement which has been approved in accordance with article 98.

(2) The authorised agreement remains valid in respect of the UK group entity for as long as the members of the entity have not revoked their approval in accordance with this article.

(3) Paragraph (4) applies where at least five per cent. of the members of the entity require the directors to—

(a) call a general meeting of the entity to determine whether their approval of the authorised agreement should be revoked; or

(b) circulate a written resolution proposing that the approval should be revoked.

(4) The members' approval of the authorised agreement is revoked if an ordinary resolution revoking it is passed by the members—

(a) present and voting either in person or by proxy at a general meeting; or

(b) by way of a written resolution proposed by the directors.

(5) An ordinary resolution may not be passed unless the directors of the entity make available to its members a memorandum setting out the proposed resolution—

(a) in the case of a written resolution, by sending the memorandum to every member at or before the time at which the proposed resolution is submitted to the members;

(b) in the case of a resolution at a general meeting, by making the memorandum available for inspection by the members—

(i) at the entity's registered office for not less than fifteen days ending with the date of the meeting; and

(ii) at the meeting itself.

Obligation to provide annual report U.K.

100.—(1) The directors of the UK group entity which has entered into an authorised agreement must prepare an annual report on the performance of the agreement and the implementation of any decision taken pursuant to it.

(2) The directors must deliver a copy of the annual report to every member of the entity, electronically or by other means, no later than the first and each subsequent anniversary of the date on which the entity enters into the agreement.

CHAPTER 4 U.K. Provision of group financial support

Interpretation of Chapter 4 U.K.

101.—(1) In this Chapter—

[F19 “authorised agreement” has the same meaning as in Chapter 3;]

F20 ...

“conditions for financial support” has the same meaning as in Chapter 1;

“financial support” has the same meaning as in Chapter 1;

“group entity” means a relevant parent undertaking or group subsidiary which has entered into a group financial support agreement authorised by the PRA [F21 or FCA] (“the agreement”);

“intended recipient” means the group institution named in a relevant notice as the recipient of the financial support referred to in the notice;

“notifying group entity” means the group entity which has given a relevant notice;

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

[F22 “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;]

“UK group entity” means a group entity set up in the United Kingdom.

(2) In this article, for the interpretation of “group entity” and “intended recipient”, the expressions “group subsidiary”, “group financial support agreement”, “group institution” and “relevant parent undertaking” have the meaning given in Chapter 1.

Textual Amendments

F19 Words in art. 101(1) 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. 56(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F20 Words in art. 101(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. 56(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

F21 Words in art. 101(1) 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. 56(2)(c); 2020 c. 1, Sch. 5 para. 1(1)

F22 Words in art. 101(1) 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. 56(2)(d); 2020 c. 1, Sch. 5 para. 1(1)

Relevant notice from UK group entity: decision by the PRA or FCA U.K.

102.—(1) Where the PRA or FCA receives a relevant notice from a UK group entity, it must, within five business days beginning with the date on which it receives the notice, decide whether to—

(a) agree the provision of the financial support to which the notice refers; or

(b) prohibit or restrict the provision of that financial support on the ground that the conditions for financial support have not been met.

(2) The regulator must give written notice of its decision, including a reasoned account of the decision—

(a) to the notifying group entity; [F23 and]

F24 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) unless the regulator is the consolidating supervisor, to the consolidating supervisor;

(d) unless the regulator is the competent authority for the intended recipient, to that authority; and

(e) where the regulator has authorised the intended recipient, to the intended recipient.

(3) In this article “the regulator”—

(a) where the relevant notice is received from a PRA-authorised person, means the PRA; and

(b) where the relevant notice is received from any other UK group entity, means the FCA.

[F25 (4) In this article “business day” has the same meaning as in section 70D(1) of the Banking Act 2009 F26 .]

Textual Amendments

F23 Word in art. 102(2)(a) added (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. 57(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F24 Art. 102(2)(b) 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. 57(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

F25 Art. 102(4) 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. 57(3); 2020 c. 1, Sch. 5 para. 1(1)

F26 Section 70D inserted by S.I. 2014/3329.

Duties of consolidating supervisor where financial support agreed, prohibited or restricted U.K.

103.—(1) This article applies where the PRA or FCA is the consolidating supervisor.

F27 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Paragraph (4) applies where—

(a) a competent authority prohibits or restricts the provision of financial support to which a relevant notice refers;

(b) the group recovery plan refers to the provision of group financial support; and

(c) either—

(i) the relevant competent authority for the intended recipient asks the appropriate regulator for a re-assessment of the plan; or

(ii) the appropriate regulator is the competent authority for the intended recipient.

(4) The appropriate regulator—

(a) must consider whether to require the group recovery plan to be reviewed under article 34; and

(b) if the appropriate regulator is the competent authority for the intended recipient and the intended recipient has drawn up a recovery plan on an individual basis, must consider whether to require that plan to be reviewed under article 33.

F28 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F27 Art. 103(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. 58(2); 2020 c. 1, Sch. 5 para. 1(1)

F28 Art. 103(5) 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. 58(2); 2020 c. 1, Sch. 5 para. 1(1)

Re-assessment of recovery plans by the PRA or FCA where it is not the consolidating supervisor U.K.

F29 104.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F29 Art. 104 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. 59; 2020 c. 1, Sch. 5 para. 1(1)

Requesting the assistance of EBA U.K.

F30 105.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F30 Art. 105 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. 59; 2020 c. 1, Sch. 5 para. 1(1)

Reciprocal support U.K.

106.  Where the PRA or FCA agrees the provision, with or without restrictions, of the financial support to which a relevant notice refers, the notifying group entity may agree with the intended recipient of that support to receive financial support from the intended recipient.