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

Publication Date:January 01, 2014
 
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2014No. 3348

FINANCIAL SERVICES AND MARKETS

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

18thDecember2014

19thDecember2014

The Treasury make the following Order in exercise of the powers conferred by section 2(2) of the European Communities Act 1972( 1), section 192B(4) of the Financial Services and Markets Act 2000( 2) and section 230 of the Banking Act 2009( 3).

The Treasury are designated( 4) for the purposes of the European Communities Act 1972 in relation to financial services.

PART 1

Introductory provisions

Citation and commencement

1. (1) This Order may be cited as the Bank Recovery and Resolution (No. 2) Order 2014.

(2) This Order, except Part 9, comes into force on 10th January 2015.

(3) Part 9 of this Order comes into force on 1st January 2016.

Interpretation

2. (1) In this Order, except where provision is made to the contrary-

"another EEA State" means an EEA State other than the United Kingdom;

"appropriate regulator"-

(a) in relation to an institution which is not part of a group subject to supervision on a consolidated basis in accordance with Article 111 of the capital requirements directive-(i) if the institution is a PRA-authorised person, means the PRA;(ii) if the institution is any other UK authorised person, means the FCA;(b) in relation to a relevant group-(i) where the PRA is the consolidating supervisor, means the PRA;(ii) where the FCA is the consolidating supervisor, means the FCA;(iii) where neither the PRA nor the FCA is the consolidating supervisor, means the PRA in relation to a PRA-authorised person and the FCA in relation to any other UK authorised person;

"the Bank" means the Bank of England;

"the capital requirements directive" means Directive 2013/36/EU of the European Parliament and of the Council of 26th June 2013 on access to the activity of credit institutions and the prudential supervisions of credit institutions and investment firms, amending Directive 2002/87/ECand repealing Directives 2006/48/ECand 2006/49/EC( 5);

"the capital requirements regulation" means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26th June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012( 6);

"college", in relation to a relevant group, except in Chapters 1, 2 and 3 of Part 16-

(a) means the resolution college( 7) established for that group by- (i) the Bank under Chapter 2 of that Part; or(ii) the resolution authority( 8) established in another EEA State in accordance with Article 88 of the recovery and resolution directive (resolution colleges); and (b) includes an existing grouping or college used to facilitate the performance of the tasks which would otherwise be performed by a resolution college established for that group;

"competent authority"-

(a) for a participating member State within the meaning given by point (1) of Article 2 (definitions) of Council Regulation (EU) No. 1024/2013 of 15th October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions( 9)- (i) in relation to tasks conferred by that Council Regulation on the European Central Bank, means the European Central Bank;(ii) in relation to any other tasks carried out for prudential supervisory purposes or other purposes relating to the authorisation and supervision of institutions( 10), has the same meaning as it has for other EEA States (b) for any other EEA State, means a public authority or body officially recognised by national law which is empowered by national law to supervise institutions as part of the supervisory system in operation in the EEA State concerned;

"conditions for resolution"-

(a) in relation to an institution authorised by the PRA or FCA, means the conditions for the exercise of stabilisation powers in section 7 of the Banking Act 2009( 11) (general conditions for exercise of stabilisation powers);(b) in relation to an undertaking set up in the United Kingdom, other than an institution, means the conditions for the exercise of stabilisation powers in section 81B (groups: sale to commercial purchaser and transfer to bridge bank), section 81ZBA (transfer to asset management vehicle) or section 81BA (groups: bail-in option) of the Banking Act 2009( 12); and(c) in relation to an undertaking set up in any other EEA State, means the conditions referred to in Article 32.1 of the recovery and resolution directive (conditions for resolution);

"the consolidating supervisor" means the competent authority responsible for the exercise of supervision on the basis of the consolidated situation (within the meaning given by point (47) of Article 4.1 of the capital requirements regulation) of-

(a) an EEA parent institution; or(b) institutions controlled( 13) by an EEA parent financial holding company or EEA parent mixed financial holding company;

"critical functions"-

(a) in relation to an undertaking set up in the United Kingdom, has the meaning given in section 3 of the Banking Act 2009( 14) (interpretation: other expressions); and(b) in relation to an undertaking set up in any other EEA State, has the meaning given by point (35) of Article 2.1 of the recovery and resolution directive (definitions);

"derivative contract" has the meaning given by point (5) of Article 2 of Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories( 15);

"EBA" means the European Banking Authority established by the EBA Regulation;

"the EBA Regulation" means Regulation (EU) No.1093/2010 of the European Parliament and of the Council of 24th November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No. 716/2009/ECand repealing Commission Decision 2009/78/EC( 16);

"EEA parent financial holding company" means a parent financial holding company in an EEA State which is not a subsidiary of an institution set up in any EEA State or of another financial holding company or a mixed financial holding company set up in any EEA State;

"EEA parent institution" means a parent institution in an EEA State which is not a subsidiary of another institution set up in any EEA State or of a financial holding company or mixed financial holding company set up in any EEA State;

"EEA parent mixed financial holding company" means a parent mixed financial holding company in an EEA State which is not a subsidiary of an institution set up in any EEA State or of a financial holding company or another mixed financial holding company set up in any EEA State;

"EEA parent undertaking" means an EEA parent institution, EEA parent financial holding company or EEA parent mixed financial holding company

"eligible liabilities"-

(a) in relation to an undertaking set up in the United Kingdom, has the meaning given in section 3(1) of the Banking Act 2009; and(b) in relation to an undertaking set up in any other EEA State, has the meaning given by point (71) of Article 2.1 of the recovery and resolution directive;

"the FCA" means the Financial Conduct Authority";

"financial holding company" has the meaning given by point (20) of Article 4.1 of the capital requirements regulation;

"financial institution", except in Part 18, has the meaning given by point (26) of Article 4.1 of the capital requirements regulation;

"Financial Policy Committee" means the Financial Policy Committee of the Bank established by section 9B of the Bank of England Act 1998( 17);

"FSMA" means the Financial Services and Markets Act 2000;

"group entity", in relation to a relevant group, means the EEA parent undertaking or a group subsidiary;

"group recovery plan" means a document which provides for measures to be taken in relation to a relevant group to achieve the stabilisation of the group as a whole, or of any institution within the group, where the group or the institution is in a situation of financial stress, in order to address or remove the causes of the financial stress and restore the financial position of the group or institution;

"group resolution plan", in relation to a relevant group, means a document which makes provision for-

(a) taking resolution action( 18) in respect of the group, whether at the level of the parent undertaking or of an institution within the group; or(b) co-ordinating the application of resolution tools and the exercise of resolution powers( 19) by resolution authorities in respect of group entities that meet the conditions for resolution;

"group subsidiary", in relation to a relevant group, means a subsidiary within that group which is an institution, a financial institution, a financial holding company or a mixed financial holding company;

"insolvency proceedings" includes-

(a) proceedings under the Insolvency Act 1986( 20); and(b) the procedure in Part 2 of the Banking Act 2009 (bank insolvency) and in Part 3 of that Act (bank administration);

"mixed activity holding company" has the meaning given by point (22) of Article 4.1 of the capital requirements regulation;

"mixed financial holding company" has the meaning given by point (21) of Article 4.1 of the capital requirements regulation;

"own funds" has the meaning given by point (118) of Article 4.1 of the capital requirements regulation;

"parent financial holding company in an EEA State" means a financial holding company which is not itself a subsidiary of-

(a) an institution set up in the same EEA State;(b) another financial holding company set up in the same EEA State; or(c) a mixed financial holding company set up in the same EEA State;

"parent institution in an EEA State" means an institution which-

(a) has an institution or financial institution as a subsidiary, or holds a participation (within the meaning given by point (35) of Article 4.1 of the capital requirements regulation) in an institution or financial institution, and(b) is not itself a subsidiary of another institution set...

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