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

CHAPTER 4 U.K. Determination of minimum requirements for group institutions where the PRA or FCA is the consolidating supervisor

Application and interpretation of Chapter 4 U.K.

133.—(1) This Chapter applies where the PRA or FCA is the consolidating supervisor in relation to a relevant group.

(2) In this Chapter—

F1 ... “group entity” and “minimum requirement” have the same meaning for the relevant group as they have for a relevant group in Chapter 2;

[F2 “group institution” means an institution, other than a mortgage credit institution within the meaning given in Chapter 1, that—

(a)

is authorised by the PRA or FCA and

(b)

forms part of a relevant group;]

“minimum consolidated requirement” means the minimum consolidated requirement (within the meaning given in Chapter 2) which is determined for the relevant group;

“netting arrangement” has the same meaning as in Chapter 2;

F3 ...

F3 ...

Textual Amendments

F1 Words in art. 133(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. 74(2)(a); 2020 c. 1, Sch. 5 para. 1(1)

F2 Words in art. 133(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. 74(2)(b); 2020 c. 1, Sch. 5 para. 1(1)

F3 Words in art. 133(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. 74(3); 2020 c. 1, Sch. 5 para. 1(1)

Duties of the Bank in relation to minimum requirement U.K.

134.—(1) The Bank must exercise the powers conferred by section 3A of the Banking Act 2009—

(a) to ensure that a [F4 group institution] is required at all times to maintain a minimum requirement; and

(b) with the object of ensuring that at all times the institution meets the minimum requirement specified in a direction given for that purpose.

F5 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F5 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Words in art. 134(1)(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. 75(2); 2020 c. 1, Sch. 5 para. 1(1)

F5 Art. 134(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. 75(3); 2020 c. 1, Sch. 5 para. 1(1)

Determination of minimum requirement U.K.

135.—(1) This article applies for the purpose of determining the minimum requirement for a group institution.

(2) The amount of the institution's total liabilities must include total liabilities under any derivative contracts held by the institution.

(3) An assessment of total liabilities under a derivative contract must take account of the rights of the parties to the contract to set off or net under a netting arrangement.

(4) [F6 An eligible liability must be excluded] from the amount of the institution's [F7 own funds and eligible liabilities] if—

(a) the instrument that creates the liability is not issued or fully paid up;

(b) the liability is owed to, or secured or guaranteed by, the institution itself;

(c) the purchase of the instrument that creates the liability was funded directly or indirectly by the institution itself;

(d) the liability has a remaining maturity of less than one year;

(e) the liability arises from a derivative contract held by the institution;

(f) the liability arises from a deposit in respect of which the depositor's rights, in any proceedings relating to the insolvency of the institution, would be preferred to the rights of other creditors; or

(g) the instrument that creates the liability is governed by the law of a third country and the Bank is not satisfied that a decision by the Bank to convert or write down the liability would be effective under that law.

(5) For the purpose of paragraph (4)(d), where the instrument that creates the liability confers on a party to the instrument a right to the repayment of a sum before maturity, the maturity date is the first date on which that party would become entitled to repayment if the right were exercised.

(6) The determination—

(a) must be based on an assessment of the criteria set out in [F8 article 126(8)(a)]; and

(b) must take account of the minimum consolidated requirement.

(7) F9 ... The Bank must make the assessment under paragraph (6)(a) in consultation with—

(a) the PRA, if the institution is a PRA-authorised person;

(b) the FCA, if the institution is any other UK authorised person.

Textual Amendments

F6 Words in art. 135(4) substituted (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 41(14)(a)

F7 Words in art. 135(4) substituted (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 41(14)(b)

F8 Words in art. 135(6)(a) substituted (28.12.2020) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(2), 53

F9 Words in art. 135(7) 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. 76(3); 2020 c. 1, Sch. 5 para. 1(1)

Joint determination of minimum requirements U.K.

F10 136.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10 Art. 136 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. 77; 2020 c. 1, Sch. 5 para. 1(1)

References to EBA: determination of minimum requirement U.K.

F11 137.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F11 Art. 137 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. 77; 2020 c. 1, Sch. 5 para. 1(1)

Review of minimum requirements U.K.

138.—(1) The Bank must review the minimum requirements for group institutions when, in accordance with Chapter 4 of Part 5, it reviews the group resolution plan.

(2) Articles 134 [F12 and 135] apply for the purpose of the review, but have effect for that purpose as if each reference to determining (or the determination of) a minimum requirement were a reference to re-determining (or the re-determination of) the requirement on review.

Textual Amendments

F12 Words in art. 138(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. 78(2); 2020 c. 1, Sch. 5 para. 1(1)

Minimum requirement for other group entities set up in the United Kingdom U.K.

139.—(1) The Bank may decide, after consulting the regulator, that a group entity, other than a [F13 group institution], set up in the United Kingdom should be required to maintain a minimum requirement for own funds and eligible liabilities F14 ....

(2) Where the Bank makes a such decision, articles 134 [F15 , 135 and 138] apply for the purpose of determining and reviewing the requirement and ensuring that the requirement is maintained and met, but have effect for that purpose as if each reference to an institution F16 ... included a reference to the group entity for which the requirement is being (or has been) determined.

(3) In this article “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.

Textual Amendments

F13 Words in art. 139(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. 79(2); 2020 c. 1, Sch. 5 para. 1(1)

F14 Words in art. 139(1) omitted (28.12.2020) by virtue of The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(2), 54

F15 Words in art. 139(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. 79(3)(a); 2020 c. 1, Sch. 5 para. 1(1)

F16 Words in art. 139(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. 79(3)(b); 2020 c. 1, Sch. 5 para. 1(1)