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

PART 13 U.K. Preparation of business reorganisation plans after application of bail-in tool

CHAPTER 1 U.K. Assessment of business reorganisation plan drawn up by an institution

Application and interpretation of Chapter 1 U.K.

159.—(1) This Chapter applies where—

(a) an institution is authorised by the PRA or FCA and is not part of a group subject to supervision on a consolidated basis in accordance with [F1 the capital requirements regulation and CRR rules];

(b) the Bank has made a resolution instrument under section 12A of the Banking Act 2009 M1 (bail-in option) in respect of the institution; and

(c) the management body [F2 of the institution or the] resolution administrator submits a business reorganisation plan to the Bank for assessment in accordance with [F3 section 48H of the Banking Act 2009] (business reorganisation plan).

(2) In this Chapter—

F4 ...

F4 ...

“resolution administrator” means the individual or body corporate appointed by the Bank under section 62B of the Banking Act 2009 M2 as the resolution administrator of the institution.

Textual Amendments

F1 Words in art. 159(1)(a) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 19(11)

F2 Words in art. 159(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. 91(2)(b)(i); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in art. 159(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. 91(2)(b)(ii); 2020 c. 1, Sch. 5 para. 1(1)

F4 Words in art. 159(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. 91(3); 2020 c. 1, Sch. 5 para. 1(1)

Marginal Citations

M1 Section 12A was inserted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 2; and was amended by S.I. 2014/3329.

M2 Section 62B was inserted by S.I. 2014/3329.

Assessment of business reorganisation plan U.K.

160.  The Bank must assess the business reorganisation plan jointly with the appropriate regulator within one month beginning with the date on which it receives the plan.

Purpose of assessment U.K.

161.—(1) The purpose of the assessment of the business reorganisation plan is to determine whether the plan meets the criteria for assessment.

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

(3) The criteria for assessment are that—

[F5 (a) the plan must include the details specified in—

(i) section 48H(2) of the Banking Act 2009;

(ii) any technical standards made under paragraph (4)(a);]

F6 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) the arrangements proposed in the plan would, if implemented, be reasonably likely to restore the long-term viability of the institution or of part of its business.

[F7 (d) the arrangements proposed in the plan must be based on realistic assumptions as to the economic and financial market conditions under which the institution 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 institution's main vulnerabilities;

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

(g) the plan meets any further criteria specified in technical standards made under paragraph (4)(b).]

[F8 (4) The Bank may make technical standards specifying—

(a) further details to be included in business reorganisation plans; or

(b) further criteria for the assessment of business reorganisation plans.]

Textual Amendments

F5 Art. 161(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. 92(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F6 Art. 161(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(2) (with Sch. 3)

F7 Art. 161(3)(d)-(g) 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. 92(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

F8 Art. 161(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. 92(3); 2020 c. 1, Sch. 5 para. 1(1)

Revision of plan U.K.

162.—(1) The Bank—

(a) must notify the management body or resolution administrator if the business reorganisation plan is found on assessment to contain any material deficiency or measure which would impede its implementation or the object of restoring the long-term viability of the institution or of part of its business; and

(b) may not require the management body or resolution administrator to revise the plan without giving it an opportunity to state its opinion on that requirement.

(2) If the Bank requires the management body or resolution administrator 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 management body or resolution administrator 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 management body or resolution administrator to make specific changes to the plan.

CHAPTER 2 U.K. Assessment of business reorganisation plan drawn up by a single group entity

Application and interpretation of Chapter 2 U.K.

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

(a) the Bank has made a resolution instrument under section 12A of the Banking Act 2009 in respect of a single group entity which is not an institution (“the relevant entity”); and

(b) the management body [F9 of the relevant entity or the] resolution administrator submits a to the Bank for assessment F10 ....

(2) In this Chapter “business reorganisation plan” [F11 has the meaning given in section 48H of the Banking Act 2009, as applied by section 81BA of that Act] and “resolution administrator” [F12 has the] same meaning for the relevant entity as [F13 it has] for an institution in Chapter 1.

Textual Amendments

F9 Words in art. 163(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. 93(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F10 Words in art. 163(1)(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. 93(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

F11 Words in art. 163(2) 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. 93(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F12 Words in art. 163(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. 93(3)(b); 2020 c. 1, Sch. 5 para. 1(1)

F13 Words in art. 163(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. 93(3)(c); 2020 c. 1, Sch. 5 para. 1(1)

Assessment etc of business reorganisation plan U.K.

164.  Chapter 1 applies for the purpose of the assessment and approval of the business reorganisation plan, but has effect for that purpose with the modifications specified in the table—

Article	Modification
Article 159	Ignore this article.
Articles 160,161 and 162	Each reference to an institution is a reference to the relevant entity. F14 ... F14 ...

Textual Amendments

F14 Words in art. 164 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. 94(2); 2020 c. 1, Sch. 5 para. 1(1)

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 [F15 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—

F16 ...

“four month period” means four months beginning with the date on which the Bank [F17 receives the business reorganisation plan under paragraph (1)(c)];

“group institution” means—

(a)

the [F18 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;

[F19 “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

F20 ...

Textual Amendments

F15 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)

F16 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)

F17 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)

F18 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)

F19 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)

F20 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.

F21 166.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F21 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) F22 ... The Bank must assess the business reorganisation plan jointly with the regulator.

F23 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F23 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F22 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)

F23 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 F24 ... are satisfied that the plan meets the criteria for assessment.

(3) The criteria for assessment are that—

[F25 (a) the plan must include the details specified in section 48H(2) of the Banking Act 2009;]

F26 (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.

[F27 (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

F24 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)

F25 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)

F26 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)

F27 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.

F28 170.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F28 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 F29 ... group entity if the business reorganisation plan is found on assessment to contain an impediment; and

(b) may not require a F29 ... group entity to revise the plan without giving it an opportunity to state its opinion on that requirement.

(2) If the Bank requires a F29 ... 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

F29 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.

F30 173.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F30 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.

F31 174.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F31 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)

F32 CHAPTER 4 U.K. Assessment of business reorganisation plan drawn up for relevant group where neither the PRA nor the FCA is the consolidating supervisor

Textual Amendments

F32 Pt. 13 Ch. 4 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. 102; 2020 c. 1, Sch. 5 para. 1(1)

Application and interpretation of Chapter 4 U.K.

F32 175.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purpose of assessment U.K.

F32 176.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Joint assessment of plan U.K.

F32 177.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

F32 178.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to EBA U.K.

F32 179.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requesting the assistance of EBA U.K.

F32 180.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .