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

Assessment of resolvability

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

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

(a) consider all relevant matters, including the matters set out in Section C of the Annex to the recovery and resolution directive (matters that the resolution authority is to consider when assessing the resolvability of an institution or group);

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

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

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

(c) not assume that the institution will be in receipt of—

(i) extraordinary public financial support;

(ii) emergency liquidity assistance(1); or

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

(d) consult—

(i) the appropriate regulator; and

(ii) so far as the plan is relevant to a significant branch which an institution within the relevant group has in another EEA State, the resolution authority established in that State.

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

(4) The institution is deemed to be resolvable if the Bank concludes that it would be feasible and credible to take resolution action or insolvency proceedings in respect of the institution while avoiding to the maximum extent possible any significant adverse effect on the financial system of any EEA State or the continuity of the institution’s critical functions.

(5) The Bank must notify EBA without delay if the institution is not deemed to be resolvable.

(1)

For the meaning of “extraordinary public financial support” and “emergency liquidity assistance” see the recovery and resolution directive, Article 2.1, points (28 and (29).