Part 1U.K.Special Resolution Regime

Modifications etc. (not altering text)

[F1Chapter 3 U.K. Special resolution action]

Textual Amendments

F1Pt. 1 Ch. 3 formed from ss. 4-83 (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 7

[F2Groups]U.K.

Textual Amendments

F2S. 82 cross-heading substituted (1.8.2014) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1847, art. 2

[F381C[F4Sections 81AA to 81ZBB: supplemental]U.K.

(1)In the following provisions references to banks include references to banking group companies—

(a)section 10(1), F5...

[F6(aa)section 48Z, and]

(b)section 75(5)(a).

[F7(1A)Where section 6B applies to a banking group company by virtue of section 81AA, sections 6B to 6D apply with the following modifications—

(a)references to the bank are to be read as references to the banking group company,

[F8(aa)where Case 4 in section 81AA applies, section 6B(2) is to be read as providing that “the mandatory reduction provision” is provision which, together with the mandatory reduction provision made in respect of any other subsidiary of the resolution entity that is in the same resolution group as the banking group company, produces the results referred to in subsection (1AA) of this section,]

(b)in section 6B, in subsection (8) the reference to section 6A is to be read as a reference to section 81AA and subsection (9) is to be ignored,

(c)in sections 6B and 6C references, which (by virtue of paragraph (a)) are read as references to a UK parent undertaking of a banking group company, include, where the banking group company satisfied section 81D(1)(a) by reference to a bank which is not a UK parent undertaking of the banking group company, a reference to that bank,

(d)for the purposes of section 6D, references to a bank in sections 48L(3), 48O and 48T are to be read as references to the banking group company, and, where the banking group company satisfied section 81D(1)(a) by reference to a bank (“the failing bank”), those references to a bank (except the first reference in section 48T(1)) are also to be read as including a reference to the failing bank.

[F9(1AA)The results are that—

(a)the principal amount of the relevant capital instruments or relevant internal liabilities of the banking group company is reduced, or

(b)such instruments or liabilities of the banking group company are converted (directly or indirectly) into Common Equity Tier 1 instruments,

(or both (a) and (b)) in accordance with the principle that losses of the bank referred to in relation to that banking group company in section 81AA(8A)(a) are effectively passed on to, and the bank is recapitalised by, the resolution entity that is in the same resolution group as the banking group company.]

(1B)Where the Bank of England makes a mandatory reduction instrument in respect of a banking group company, section 6E applies (with any necessary modifications) as if the banking group company were a bank.]

(2)Where the Bank of England exercises a stabilisation power in respect of a banking group company in reliance on section 81B [F10, 81ZZBA, 81ZBA or 81ZBB], the provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 [F11, 8 and 8ZA]) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.

(3)For the purposes of the application of section 143 (grounds for applying for bank administration order), the reference in subsection (2) to the Bank of England exercising a stabilisation power includes a case where the Bank of England intends to exercise such a power.]

Textual Amendments

F3Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

F5Word in s. 81C(1)(a) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 93(2)(a)