Groups: transfer to asset management vehicle: holding companies
15. After section 81ZBA insert—
“Transfer to asset management vehicle: supplemental powers in relation to certain holding companies
81ZBB.—(1) Without prejudice to the operation of section 81ZBA, the Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12ZA(3) if the following conditions are met.
(2) Condition 1 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.
(3) Condition 2 is that the banking group company is an entity within Article 1.1(c) or (d) of the recovery and resolution directive.
(4) Condition 3 is that the PRA is satisfied that the banking group company is failing or likely to fail.
(5) Condition 4 is that the Bank of England is satisfied that, having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the banking group company that will result in Condition 3 ceasing to be met.
(6) Condition 5 is that the power is exercised in connection with the exercise of one or more stabilisation powers in respect of the banking group company otherwise than for the purposes of the third stabilisation option.
(7) Condition 6 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in the advancement of one or more of the special resolution objectives.
(8) Condition 7 is that the Bank of England is satisfied that one or more of the special resolution objectives would not be met to the same extent by the winding up of the banking group company.
(9) Condition 8 (which applies only in a financial assistance case) is that—
(a)the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and
(b)in the Bank of England’s opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection.
(10) Condition 9 is that the Bank of England is satisfied that—
(a)the situation of the market for the assets which it is proposed to transfer by the exercise of the stabilisation power is of such a nature that the liquidation of those assets under normal insolvency proceedings could have an adverse effect on one or more financial markets,
(b)the transfer is necessary to ensure the proper functioning of the banking group company from which the transfer is to be made, or
(c)the transfer is necessary to maximise the proceeds available for distribution.
(11) In this section—
“financial assistance case” has the meaning given in section 81B(8); and
“normal insolvency proceedings” has the meaning given in section 81ZBA.
Assessment of conditions for section 81ZBB
81ZBC.—(1) This section applies for the purposes of section 81ZBB.
(2) The PRA must treat Condition 3 as met if satisfied that it would be met but for financial assistance provided by—
(a)the Treasury, or
(b)the Bank of England,
disregarding ordinary market assistance offered by the Bank of England on its usual terms.
(3) The Bank of England must treat Condition 4 as met if satisfied that it would be met but for financial assistance of the kind mentioned in subsection (2).
(4) For the purposes of Condition 3, a banking group company is failing or likely to fail if—
(a)it is contravening or likely to contravene a regulatory requirement where that contravention is serious in nature or directly related to a deterioration in the financial situation of the banking group company which threatens the viability of—
(i)the banking group company, or
(ii)another undertaking in the same resolution group,
(b)it is failing, or is likely to fail, to meet the approval conditions set out in section 192R(3) to (6) of the Financial Services and Markets Act 2000 in circumstances where that failure—
(i)would justify the taking of measures in relation to the company by the PRA under section 192T(1) of that Act, and
(ii)is serious in nature,
(c)the value of the assets of the banking group company is less than the amount of its liabilities,
(d)the banking group company is unable to pay its debts or other liabilities as they fall due,
(e)paragraph (c) or (d) (or both) will, in the near future, apply to the banking group company, or
(f)extraordinary public financial support is required in respect of the banking group company and subsection (5) does not apply to it.
(5) This subsection applies where, in order to remedy a serious disturbance in the economy of the United Kingdom and preserve financial stability, the extraordinary financial support takes any of the following forms—
(a)a State guarantee to back liquidity facilities provided by central banks,
(b)a State guarantee of newly issued liabilities,
(c)an injection of own funds, or purchase of capital instruments, at prices and on terms that do not confer an advantage upon the banking group company, where none of the circumstances referred to in subsection (4)(a), (b), (c), (d) or (e) are present at the time the public support is granted and none of Cases 1 to 4 in section 6A apply.
(6) Before determining that Condition 3 is met, the PRA must consult the Bank of England.
(7) Before determining whether or not Conditions 4, 5 and (where applicable) 8 are met, the Bank of England must consult—
(a)the Treasury,
(b)the PRA, and
(c)the FCA.
(8) Before determining that Conditions 6 and 7 are met the Bank of England must consult—
(a)the Treasury,
(b)the PRA, and
(c)the FCA.
(9) The special resolution objectives are not relevant to Conditions 3 and 4.
(10) In this section “regulatory requirement” means a requirement imposed—
(a)by or under the Financial Services and Markets Act 2000,
(b)by or under the capital requirements regulation,
(c)by any enactment which gives effect to the capital requirements directive or its implementing measures or any directly applicable regulation made under that directive, or
(d)by the Bank of England under this Act,
and for the purposes of this definition, “capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.”.