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

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.