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

Article 40(3)

SCHEDULE 2 Information to be contained in a group resolution plan

The context for resolution action

1.—(1) In drawing up a group resolution plan the Bank must have regard to the different circumstances under which group entities may meet the conditions for resolution.

(2) The circumstances to which the Bank must have regard include the following—

(a) that there is a situation of widespread financial instability or an occurrence of events which pose systemic risk; and

(b) that there is no such a situation or occurrence.

(3) In drawing up a group resolution plan the Bank must not assume that any group entity will be in receipt of—

(a) extraordinary public financial support other than financing arrangements made in accordance with Article 100 of the recovery and resolution directive;

(b) emergency liquidity assistance(1); or

(c) any other liquidity assistance provided by the Bank or any other central bank under non-standard collateralisation, tenor and interest rate terms.

Contents of group resolution plan

2.  A group resolution plan must—

(a) set out the resolution action or insolvency proceedings that would be taken in respect of group entities;

(b) analyse the scope for applying the resolution tools and exercising the resolution powers in a co-ordinated manner in respect of group entities;

(c) include a consideration of measures for facilitating the purchase by a third party of the relevant group as a whole or of separate business lines or activities delivered by any group entity;

(d) identify and assess potential impediments in relation to the relevant group as a whole to—

(i) the co-ordination of resolution action;

(ii) the effectiveness of resolution action or the achievement of the resolution objectives;

(e) where any subsidiary within the relevant group is set up in a third country, set out—

(i) arrangements for co-ordinating resolution action, and co-operating, with the authorities which, in the country concerned, exercise any function equivalent to a function of a resolution authority or competent authority; and

(ii) the implications of such co-ordination for the resolution(2) of that subsidiary and group entities;

(f) set out measures which the Bank considers it would be necessary to take to facilitate group resolution(3), including by the legal or economic separation of specified functions or business lines of group entities;

(g) set out any other measures which the Bank would take or considers it would be necessary to take to facilitate group resolution in respect of the relevant group;

(h) a detailed description of the assessment of resolvability made in respect of the relevant group in accordance with Chapter 2 of Part 6;

(i) explain how the resolution action set out in the plan could be financed (without the assumption that any group entity would be in receipt of the support or assistance referred to in paragraph 1(3)); and

(j) where financing arrangements made in accordance with Article 100 of the recovery and resolution directive would be required, set out principles for determining how responsibility for that financing would be shared among the EEA States in which group entities were set up.

3.  The Bank must ensure that the principles set out in accordance with paragraph 2(j) are based on equitable and balanced criteria which, in particular, take account of—

(a) the factors referred to in Article 107.5 of the recovery and resolution directive (mutualisation of national financing arrangements in the case of a group resolution); and

(b) the impact of group resolution, and of a failure to take resolution action, on the financial stability of each State concerned.

(1)

For the meaning of “emergency liquidity assistance” see the recovery and resolution directive, Article 2.1, point (29).

(2)

For the meaning of “resolution” see the recovery and resolution directive, Article 2.1, point (1).

(3)

For the meaning of “group resolution” see the recovery and resolution directive, Article 2.1, point (42).