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

CHAPTER 4 Assessment of business reorganisation plan drawn up for relevant group where neither the PRA nor the FCA is the consolidating supervisor

Application and interpretation of Chapter 4

175.—(1) This Chapter applies where, in relation to a relevant group—

(a) neither the PRA nor the FCA is the consolidating supervisor;

(b) a relevant bail-in power has been exercised in respect of two or more group entities; and

(c) the Bank receives a copy of a business reorganisation plan submitted to the group-level resolution authority(1) for assessment in accordance with Article 52 of the recovery and resolution directive.

(2) In this Chapter—

“business reorganisation plan”, “relevant bail-in power”, “relevant matters” and “UK group entity” have the same meaning for the relevant group as they have for a relevant group in Chapter 3; and

“four month period” means four months beginning with the date on which the Bank receives a copy of the business reorganisation plan.

Purpose of assessment

176.—(1) The purpose of the assessment of the business reorganisation plan is to determine whether the plan meets the criteria for assessment and decide other relevant matters.

(2) The criteria for assessment are that—

(a) the plan must satisfy the requirements set out in paragraphs 4 and 5 of Article 52 of the recovery and resolution directive;

(b) the plan must be compatible with the restructuring plan that must be submitted to the European Commission with respect to the relevant group under the Union State aid framework; and

(c) the arrangements proposed in the plan would, if implemented, be reasonably likely to restore the long-term viability of the group entities, or parts of the business of the group entities, in respect of which a relevant bail-in power has been exercised and of the whole or part of the relevant group.

Joint assessment of plan

177.—(1) The Bank must assess the business reorganisation plan jointly with other resolution authorities for group entities.

(2) The Bank must endeavour to conclude the assessment within the four month period, and must for this purpose endeavour to reach a joint decision on relevant matters.

(3) Where the Bank concludes a joint assessment of the business reorganisation plan, it must exercise its powers under the Banking Act 2009, so far as necessary, for the purpose of implementing each decision on relevant matters, including a decision to direct a UK group entity to—

(a) submit a revision of the plan; or

(b) make specific changes to the plan.

(4) Where the Bank and the group-level resolution authority—

(a) are able to conclude a joint assessment of the business reorganisation plan, but

(b) are unable to reach a joint decision on whether to require group entities to draw up and submit business reorganisation plans on an individual basis,

the Bank must decide the matter referred to in sub-paragraph (b) for group entities for which it is the resolution authority.

(5) Where the Bank and the group-level resolution authority are unable to conclude a joint assessment of the business reorganisation plan, the Bank must either—

(a) require group entities for which it is the resolution authority to draw up and submit business reorganisation plans on an individual basis; or

(b) require those entities to draw up and submit a single business reorganisation plan for all of them.

(6) Where the Bank requires a single business reorganisation plan to be drawn up and submitted under paragraph (5)(b), the Bank must assess the plan submitted as if it were a business reorganisation plan which the Bank was required to assess jointly with the regulator under Chapter 3.

Assessment of business reorganisation plans drawn up on an individual basis

178.  Where the Bank requires a group entity to draw up and submit a business reorganisation plan on an individual basis, Chapter 1 applies for the purpose of the assessment of the plan, but has effect for that purpose as if each reference to an institution were a reference to the group entity.

References to EBA

179.—(1) The Bank may, within the four month period, refer to EBA in accordance with Article 19 of the EBA Regulation any matter relating to the assessment of the business reorganisation plan.

(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

180.  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—

(a) the assessment of the business reorganisation plan;

(b) whether to require group entities to draw up and submit business reorganisation plans on an individual basis; or

(c) whether to direct a UK group entity to submit a revision of the business reorganisation plan or make specific changes to the plan.

(1)

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