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

PART 5 Resolution plans

CHAPTER 1 Resolution plans for institutions

Interpretation of Chapter 1

36.  In this Chapter “relevant institution” means an institution which is authorised by the PRA or FCA and is not part of a group subject to supervision on a consolidated basis in accordance with Article 111 of the capital requirements directive.

The Bank’s duty to draw up resolution plans

37.—(1) The Bank must draw up and adopt a resolution plan for each relevant institution.

(2) Subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(b)) with respect to a resolution plan, the plan must contain the information, and be drawn up with regard to the considerations, set out in Schedule 1.

(3) The resolution plan must be drawn up on the basis of the information provided for that purpose by the relevant institution or the appropriate regulator and any other relevant information.

(4) For the purpose of drawing up a resolution plan the Bank must consult—

(a) the appropriate regulator; and

(b) the resolution authority established in any other EEA State in which the relevant institution has a significant branch.

(5) The Bank must provide the relevant institution with a summary of the key elements of the resolution plan.

Duty to transmit a copy of the resolution plan

38.  The Bank must send a copy of the resolution plan adopted for a relevant institution to the appropriate regulator.

CHAPTER 2 Group resolution plan where the PRA or FCA is the consolidating supervisor

Application of Chapter 2

39.  This Chapter applies where the PRA or FCA is the consolidating supervisor in relation to a relevant group.

The Bank’s duty to draw up group resolution plans

40.—(1) Where every group entity is set up in the United Kingdom, the Bank must draw up and adopt a group resolution plan, and is solely responsible for the plan.

(2) Where a group entity is set up in another EEA State, the Bank must endeavour within the college to draw up and adopt a group resolution plan jointly with the resolution authority for that entity.

(3) Subject to the imposition of any simplified obligations (within the meaning given by article 9(3)(b)) with respect to a group resolution plan, the plan must contain the information, and be drawn up with regard to the considerations, set out in Schedule 2.

(4) The resolution plan must be drawn up on the basis of—

(a) the information provided for that purpose by a group entity set up in the United Kingdom or by the appropriate regulator; and

(b) any other relevant information.

(5) For the purpose of drawing up a group resolution plan, the Bank must consult—

(a) the appropriate regulator;

(b) each relevant competent authority; and

(c) so far as the plan is relevant to a significant branch which an institution within the relevant group has in another EEA State, the resolution authority established in that State.

(6) A group resolution plan must not have a disproportionate impact on any EEA State.

(7) For the purpose of drawing up a group resolution plan, so far as the plan is relevant to—

(a) a subsidiary within the relevant group which is set up in a third country, or

(b) an institution within the relevant group which has a significant branch in a third country,

the Bank may consult the authorities which, in the country concerned, exercise any function equivalent to a function of a resolution authority or competent authority.

Information to be transmitted for the purpose of drawing up group resolution plans

41.—(1) For the purposes of drawing up and adopting a group resolution plan the Bank must send relevant information—

(a) to EBA;

(b) where the plan is being drawn up by the Bank jointly with other resolution authorities, to those authorities;

(c) to the authorities which must be consulted under article 40(5).

(2) This article does not require any information to be disclosed if its disclosure would be contrary to section 348 of FSMA as applied for the purposes of Part 1 of the Banking Act 2009 (with modifications) by section 89L of that Act(1) (restrictions on disclosure of confidential information).

(3) In this article “relevant information” means information which is provided to the Bank by the appropriate regulator or is otherwise available to the Bank and—

(a) in the case of EBA, is required to enable EBA to exercise its functions in relation to drawing up a group resolution plan;

(b) in the case of the resolution authority for a group entity (other than the Bank), is required for the purpose of drawing up a group resolution plan jointly with the Bank;

(c) in the case of an authority which must be consulted under article 40(5)—

(i) is relevant to a group entity set up in the EEA State in which the authority is established;

(ii) is relevant to a significant branch situated in that State; or

(iii) is otherwise required to enable the authority to make an effective response to consultation by the Bank.

Joint decision on adoption of group resolution plan

42.—(1) Where the Bank endeavours to reach a decision on the adoption of a group resolution plan jointly with one or more other resolution authorities under article 40(2), it must endeavour to reach that decision within four months beginning with the date on which it transmits information under article 41 (“the four month period”).

(2) Where the Bank and another resolution authority (“authority A”) are unable to reach a joint decision on the adoption of a group resolution plan within the four month period, the Bank must—

(a) decide the contents and details of a group resolution plan for part of the relevant group, which it may do either alone or jointly with any resolution authority with which it is able to reach a joint decision; and

(b) ensure that—

(i) the decision on the contents and details of the plan takes account of views and reservations of authority A; and

(ii) every group entity for which authority A is the resolution authority is excluded from the scope of the plan.

(3) Where another resolution authority (apart from authority A) notifies the Bank that it does not wish to adopt a group resolution plan for part of the relevant group, the Bank must ensure that every group entity for which that authority is the resolution authority is excluded from the scope of the group resolution plan.

(4) The Bank must give the EEA parent undertaking written notice of the adoption of a group resolution plan under this article, including a reasoned account of the decision to adopt the plan.

(5) Where a joint decision on the adoption of a group resolution plan is reached within the four month period, the Bank must initiate a reassessment of the plan, including minimum requirements for own funds and eligible liabilities, if one of the resolution authorities (including the Bank) considers that a matter of disagreement about the plan which arose during the four month period impinges on the fiscal responsibilities of the EEA State of which it is the resolution authority.

References to EBA

43.—(1) Where, before the end of the four month period, another resolution authority has referred any matter relating to the adoption of a group resolution plan to EBA in accordance with Article 19 of the EBA Regulation, the Bank must—

(a) defer a decision on the matter referred for one month beginning with the date on which the four month period ends; and

(b) ensure that the decision conforms with any decision taken by EBA before the end of that month under Article 19.3 of the EBA Regulation.

(2) For the purposes of a reference to EBA of a matter to which this article refers the four month period is deemed to be the conciliation phase referred to in Article 19.2 of the EBA Regulation.

Requesting the assistance of EBA

44.—(1) The Bank may ask EBA to assist the resolution authorities in accordance with Article 31(c) of the EBA Regulation to reach a joint decision on the adoption of a group resolution plan.

Duty to transmit a copy of the group resolution plan

45.  The Bank must send a copy of the group resolution plan to the appropriate regulator and each relevant competent authority.

CHAPTER 3 Group resolution plan where neither the PRA nor the FCA is the consolidating supervisor

Application and interpretation of Chapter 3

46.—(1) This Chapter applies where neither the PRA nor the FCA is the consolidating supervisor in relation to a relevant group.

(2) In this Chapter “relevant college member” means a member of the college, other than the Bank, which is a resolution authority or competent authority.

Joint decision on adoption of group resolution plan

47.—(1) The Bank must endeavour to reach a decision on the adoption of a group resolution plan jointly with the group-level resolution authority(2) and other resolution authorities for group entities.

(2) The Bank must endeavour to reach that decision within four months beginning with the date on which the Bank receives information transmitted for the purpose of enabling it to draw up the plan jointly with the group-level resolution authority (“the four month period”).

Failure to reach joint decision: disagreement by the Bank with a joint proposal

48.—(1) This article applies where—

(a) a joint decision on the adoption of a group resolution plan cannot be reached within the four month period; and

(b) the Bank disagrees with the group-level resolution authority’s proposal for adopting a group resolution plan.

(2) For each group entity for which it is the resolution authority the Bank must—

(a) draw up and adopt a resolution plan having regard to any views or reservations expressed by a relevant college member during the four month period; and

(b) give notice of its decision to adopt the plan, including a reasoned account of its decision and its reasons for disagreeing with the proposal for adopting a group resolution plan, to all other members of the college.

Failure to reach joint decision: agreement by the Bank with a joint proposal

49.—(1) This article applies where—

(a) a joint decision on the adoption of a group resolution plan cannot be reached within the four month period; and

(b) the Bank agrees with the group-level resolution authority’s proposal for adopting a group resolution plan.

(2) The Bank must either—

(a) reach a decision jointly with other resolution authorities to adopt a group resolution plan for part of the relevant group; or

(b) notify the group-level resolution authority that it does not wish to adopt a group resolution plan for part of the relevant group.

(3) If the Bank gives notice under paragraph (2)(b), it must draw up and adopt a resolution plan for each group entity for which it is the resolution authority in accordance with article 48 (as if it disagreed with the proposal for adopting a group resolution plan).

Resolution plan for group entity

50.  Chapter 1, except article 36, and Schedule 1 apply for the purpose of drawing up and adopting a resolution plan for a group entity, but have effect for that purpose as if each reference to a relevant institution were a reference to a group entity.

References to EBA

51.—(1) Where, before the end of the four month period, another resolution authority has referred to EBA in accordance with Article 19 of the EBA Regulation any matter relating to a proposal by the Bank to adopt a resolution plan for a group entity, the Bank must—

(a) defer its decision for one month beginning with the date on which the four month period ends; and

(b) ensure that the decision conforms with any decision taken by EBA before the end of that month under Article 19.3 of the EBA Regulation.

(2) The Bank may, within the four month period, refer to EBA in accordance with Article 19 of the EBA Regulation any matter relating to a proposal—

(a) by the group-level resolution authority for adopting a group resolution plan; or

(b) by another resolution authority for adopting a resolution plan for a group entity.

(3) For the purposes of a reference to EBA of a matter to which this article refers the four month period is deemed to be the conciliation phase referred to in Article 19.2 of the EBA Regulation.

Requesting the assistance of EBA

52.  The Bank may ask EBA to assist the resolution authorities in accordance with Article 31(c) of the EBA Regulation to reach a joint decision on the adoption of a group resolution plan.

CHAPTER 4 Review of resolution plans and group resolution plans

Review of resolution plan

53.—(1) The Bank must review a resolution plan and make any appropriate amendment at least—

(a) once a year; or

(b) if the Bank has made a determination under article 8(5), at the intervals determined.

(2) The Bank must—

(a) review a resolution plan where any material change has been made to the legal or organisational structure of the relevant entity or to its business or financial position; and

(b) make appropriate amendments if such a change could have a material impact on the effectiveness of the plan or necessitate amendment for any other reason.

(3) For the purposes of a review of a resolution plan the Bank may make a determination under article 8(3).

(4) The Bank must review a resolution plan and adopt the up-dated plan—

(a) in the case of an institution which is authorised by the PRA or FCA and is not part of a group subject to supervision on a consolidated basis in accordance with Article 111 of the capital requirements directive, in accordance with Chapter 1; or

(b) in the case of a group entity within the meaning given in Chapter 3, in accordance with Chapter 1 as applied by article 50.

(5) For the purposes of this article Part 3 and Chapter 1 have effect with the modifications specified in the table—

Article	Modification
Article 8	In paragraph (3) the reference to a resolution plan is a reference to the up-dated plan.
Article 37	Ignore paragraph (1). In paragraph (2)— (a) the reference to a resolution plan is a reference to the up-dated plan; and (b) for “be drawn up” read “the review must be undertaken”. In paragraph (3) for “drawn up” read “reviewed”. In paragraph (4) for “drawing up” read “reviewing”. In paragraph (5) the reference to the resolution plan is a reference to the up-dated plan.
Article 38	The reference to the resolution plan is a reference to the up-dated plan.

(6) In this article—

“relevant entity” means an institution or group entity for which the Bank has adopted a resolution plan;

“resolution plan” means a plan adopted by the Bank under Chapter 1, including that Chapter as applied by article 50; and

“up-dated plan”, in relation to a resolution plan, means that plan as reviewed in accordance with this article (whether or not it has been amended on review).

Review of group resolution plan drawn up by the Bank

54.—(1) The Bank must review a group resolution plan at least—

(a) once a year; or

(b) if the Bank has made a determination under article 8(5), at the intervals determined.

(2) The Bank must—

(a) review a group resolution plan where any material change has been made to the legal or organisational structure of the relevant group or any group entity or to its business or financial position; and

(b) make appropriate amendments if such a change could have a material impact on the effectiveness of the plan or necessitate amendment for any other reason.

(3) For the purposes of a review of a group resolution plan the Bank may make a determination under article 8(3).

(4) The Bank must review a group resolution plan and adopt the up-dated plan in accordance with Chapter 2.

(5) For the purposes of this article Part 3 and Chapter 2 have effect with the modifications specified in the table—

Article	Modification
Article 8	In paragraph (3) the reference to a group resolution plan is a reference to the up-dated plan.
Article 40	In paragraphs (1) and (2) for “draw up and adopt a” read “review the”. In paragraph (3)— (a) the reference to a group resolution plan is a reference to the up-dated plan; and (b) for “be drawn up” read “the review must be undertaken”. In paragraph (4) for “drawn up” read “reviewed”. In paragraphs (5) and (7) for “drawing up a” read “reviewing the”.
Article 41	In paragraph (1) for “drawing up and adopting a” read “reviewing the”. In paragraph (1)(b) for “drawn up” read “reviewed”. In paragraph (3)(a) and (b) for “drawing up a” read “reviewing the”.
Articles 42 to 45	Each reference to a group resolution plan is a reference to the up-dated plan.

(6) In this article—

“group resolution plan” means a plan adopted by the Bank under Chapter 2; and

“up-dated plan”, in relation to a group resolution plan, means that plan as reviewed in accordance with this article (whether or not it has been amended on review).

Review of group resolution plan drawn up by another resolution authority

55.—(1) This article applies where, in relation to a relevant group—

(a) the Bank is not the group-level resolution authority; and

(b) the group-level resolution authority is responsible jointly with the Bank for reviewing a group resolution plan.

(2) The Bank must endeavour to reach a joint decision on the review of the plan and the adoption of the up-dated plan.

(3) For that purpose Chapter 3 has effect with the modifications specified in the table—

Article	Modification
Article 47	In paragraph (1) for “adoption” read “review”. In paragraph (2) for “draw up the plan” read “review the group resolution plan”.
Articles 48, 49, 51 and 52	Each reference to a group resolution plan is a reference to the up-dated plan.

(4) In this article “up-dated plan”, in relation to a group resolution plan, means that plan as reviewed in accordance with this article (whether or not it has been amended on review).

CHAPTER 5 Information and records for resolution planning

Information required for resolution planning

56.—(1) The regulator must provide the Bank with all information contained in a resolution pack prepared by a relevant person in accordance with rules made by the regulator under FSMA.

(2) This article does not require any information to be disclosed if its disclosure would be contrary to section 348 of FSMA.

(3) In this article—

“regulator” has the meaning given in section 3A(2) of FSMA(3);

“relevant person” has the meaning given in subsection (2) of section 137K of FSMA(4) (rules about resolution packs: duty to consult); and

“resolution pack” has the meaning given in subsection (3) of that section.

Notice of matters which could necessitate an amendment of a plan

57.  The PRA and the FCA must notify the Bank without delay of any change of circumstances or other matter coming to their attention which could necessitate an amendment of a resolution plan or group resolution plan.

Records of financial contracts

58.—(1) The Bank may give directions to a relevant person in relation to maintaining detailed records of financial contracts(5) to which the relevant person is a party.

(2) A “relevant person” is—

(a) an institution authorised by the PRA or FCA; or

(b) an undertaking set up in the United Kingdom which is a subsidiary of an institution authorised by the PRA or FCA or in another EEA State; or

(c) the EEA parent undertaking.

(3) A direction given by the Bank may—

(a) require records of financial contracts to be maintained;

(b) specify the details or kinds of detail which are to be recorded;

(c) require records of financial contracts to be produced at the request of the Bank;

(d) specify a period of time within which a relevant person is to be capable of producing records (“a time-limit”);

(e) specify different time-limits for different kinds of financial contract.

(4) Directions may be given with general effect or with respect to a particular relevant person or class of relevant persons, but may not specify different time-limits for different relevant persons or classes of relevant person.

(1)

Section 89L was inserted by S.I. 2014/3329.

(2)

For the meaning of “group-level resolution authority” see the recovery and resolution directive, Article 2.1, point (44).

(3)

Section 3A was substituted by the Financial Services Act 2012, section 6(1), which substituted Part 1A of FSMA.

(4)

Section 137K was substituted by the Financial Services Act 2012, section 24(1), which substituted Part 9A of FSMA; and, together with the heading, is amended by paragraph 3 of Schedule 3 to this Order.

(5)

For the meaning of “financial contracts” see the recovery and resolution directive, Article 2.1, point (100).