xmlns:atom="http://www.w3.org/2005/Atom" xmlns:atom="http://www.w3.org/2005/Atom"

PART 9U.K.Minimum requirement for own funds and eligible liabilities

CHAPTER 6U.K.Minimum requirement for own funds and eligible liabilities: other provisions

Waiver of application of Chapter 4 F1...U.K.

147.—(1) This article applies in relation to a relevant group.

(2) The Bank may waive the application of Chapter 4 F2... in relation to [F3a UK parent institution] where it—

(a)complies with the minimum consolidated requirement determined in accordance with Chapter 2 F4...; and

(b)benefits from the exercise of the discretion laid down in Article 7.3 of the capital requirements regulation.

(3) The Bank may waive the application of Chapter 4 F5... in relation to a [F6group institution] which is a group subsidiary where—

(a)both the institution and its parent undertaking are UK authorised persons;

(b)the supervision of the institution by the PRA or FCA (“the regulator”) is part of the supervision on a consolidated basis of the parent undertaking in accordance with [F7the capital requirements regulation and CRR rules];

(c)the highest level UK institution in the relevant group, if that is not the [F8UK parent institution], complies on a sub-consolidated basis with the minimum consolidated requirement determined in accordance with Chapter 2 F9...;

(d)there is no legal or other material impediment, whether actual or foreseeable, to the prompt transfer of own funds or repayment of liabilities by the parent undertaking to the institution;

(e)either—

(i)the parent undertaking has satisfied the regulator that no significant risks arise from the institution's operations; or

(ii)the parent undertaking has satisfied the regulator that the institution is prudently managed, and has declared, with the consent of the regulator, that it guarantees the institution's commitments;

(f)the institution is covered by the risk evaluation, measurement and control procedures of the parent undertaking;

(g)the parent undertaking holds more than 50 per cent. of the voting rights attached to shares in the capital of the institution or has the right to appoint or remove the majority of the members of the institution's management body (within the meaning given by point (7) of Article 3.1 of the capital requirements directive); and

(h)the institution benefits from the exercise of the discretion laid down in Article 7.1 of the capital requirements regulation.

(4) In this article—

“parent undertaking”, in relation to a UK institution, means an undertaking which is a parent undertaking of the institution and has no other subsidiary which is also a parent undertaking of the institution; and

“UK institution” means an institution which is authorised by the PRA or FCA and is not a mortgage credit institution within the meaning given in Chapter 1.

Textual Amendments

Meeting minimum requirement through contractual bail-in instruments etcU.K.

148.—(1) This article applies where—

(a)a minimum requirement is determined in accordance with Chapter 1 for an institution authorised by the PRA or FCA;

(b)a minimum requirement is determined in accordance with Chapter 4 F10... for an undertaking set up in the United Kingdom; or

(c)a minimum consolidated requirement is determined in accordance with Chapter 2 F11... for a relevant group.

(2) The Bank may determine that a minimum requirement or minimum consolidated requirement to which this article applies must be met partially through contractual bail-in instruments or composed wholly or partially of own funds or a specified kind of liability.

(3) In this article “contractual bail-in instrument” means an instrument which —

(a)contains a contract term that where the Bank decides to apply the stabilisation option referred to in paragraph (c) of section 1(3) of the Banking Act 2009 M1 (the bail-in option) in respect of the institution, undertaking or relevant group concerned, the instrument is to be written down or converted to the extent required before other eligible liabilities are written down or converted; and

(b)is subject to a binding subordination agreement, undertaking or provision under which, in the event that normal insolvency proceedings are commenced, the instrument ranks below other eligible liabilities and cannot be repaid until other eligible liabilities outstanding on the date of commencement of the insolvency proceedings have been repaid.

[F12(4) “Normal insolvency proceedings” has the meaning given in section 3(1) of the Banking Act 2009.]

Textual Amendments

Marginal Citations

M1Section 1(3) was substituted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 12(1) and (3); and was amended by S.I. 2014/3329.