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

CHAPTER 3 Removal of impediments to resolvability of institutions

Application and interpretation of Chapter 3

64.—(1) This Chapter applies where the Bank, after consulting the appropriate regulator and having made an assessment of resolvability in accordance with Chapter 1, determines that there are substantive impediments to the resolvability of an institution (“the impediments”).

(2) In this Chapter—

“determination” means a determination of a kind referred to in paragraph (1);

“pre-resolution powers” means the powers conferred on the Bank by section 3A of the Banking Act 2009(1) (removal of impediments to the exercise of stabilisation powers etc); and

“relevant proposals” means proposals which—

(a)

are prepared by an institution to which notice is given under article 65;

(b)

are for taking measures to address or remove the impediments; and

(c)

are required to be submitted by the institution within four months beginning with the date on which it receives the notice (“the four month period”).

Notice of determination

65.—(1) The Bank must give notice of a determination to—

(a) the institution concerned;

(b) the appropriate regulator; and

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

(2) The notice must—

(a) be in writing;

(b) set out the impediments; and

(c) give reasons for the determination.

Effect of notice of determination

66.—(1) A notice under article 65 has the effect of suspending the Bank’s duty to draw up a resolution plan for the institution (or review the resolution plan adopted for the institution) until the Bank has approved relevant proposals or exercised pre-resolution powers.

(2) The Bank, after consulting the appropriate regulator, must assess whether the measures set out in relevant proposals would adequately address or effectively remove the impediments.

(3) Where the institution—

(a) fails to submit relevant proposals within the four month period, or

(b) the Bank concludes that the measures set out in relevant proposals would not adequately address or effectively remove the impediments,

the Bank must exercise pre-resolution powers with the object of requiring the institution to take specified measures to address or remove the impediments (“remedial measures”).

(4) In a direction given by the Bank for that purpose the Bank must—

(a) demonstrate how the measures set out in relevant proposals would not adequately address or effectively remove the impediments;

(b) demonstrate how the remedial measures will adequately address or effectively remove the impediments in a manner proportionate to the burden or restriction imposed by the direction; and

(c) require the institution to—

(i) prepare a plan showing how it will comply with the remedial measures; and

(ii) submit that plan within one month beginning on the date of the direction.

(5) The Bank must consult the appropriate regulator and, where appropriate, the Financial Policy Committee before determining remedial measures.

(6) For the purpose of assessing relevant proposals and determining remedial measures the Bank must take account of—

(a) the threat to financial stability posed by the impediments; and

(b) the effect of the remedial measures on—

(i) the business and financial stability of the institution and its ability to contribute to the economy of the United Kingdom and other EEA States;

(ii) the EEA market for financial services;

(iii) the financial stability of any EEA State or of the EEA as a whole.

(7) The Bank must give the institution written notice of the remedial measures, including a reasoned account of its decision to require the institution to take those measures.

Right of appeal

67.—(1) A person who is aggrieved by—

(a) a determination,

(b) the Bank’s conclusion that the measures set out in relevant proposals would not adequately address or effectively remove the impediments, or

(c) the exercise of pre-resolution powers,

may refer the matter to the Tribunal (within the meaning given in section 417(1) of FSMA(2)).

(2) Part 9 of FSMA (hearings and appeals) has effect in relation to a reference to the Tribunal under paragraph (1) as if it were a reference of a decision of the Bank under FSMA.

(1)

Section 3A was inserted by S.I. 2014/3329.

(2)

This definition was inserted by S.I. 2010/22.