Additional information for purposes of a resolution plan and matters the Bank is to consider when assessing resolvability
119. After Schedule 2 insert—
Article 8(3)(a)
“SCHEDULE 2AAdditional information which may be required for the purposes of a resolution plan or group resolution plan
1. In this Schedule, “entity” means in relation to the drawing up of—
(a)a resolution plan for an institution, the institution;
(b)a group resolution plan for a relevant group, the group entities.
2. The additional information referred to in article 8(3)(a) is as follows—
(a)a detailed description of the entity’s organisational structure including a list of all legal persons contained in this structure;
(b)identification of the direct holders and the percentage of voting and non-voting rights of each legal person;
(c)the location, jurisdiction of incorporation, licensing and senior management of each legal person;
(d)a mapping of the entity’s critical operations and core business lines including material asset holdings and liabilities relating to such operations and business lines, by reference to legal persons;
(e)a detailed description of the components of the entity’s liabilities, separating, as a minimum by types and amounts of short-term and long-term debt, secured, unsecured and subordinated liabilities;
(f)details of those liabilities of the entity that are eligible liabilities;
(g)an identification of the processes needed to determine to whom the entity has pledged collateral, the person that holds the collateral and the jurisdiction in which the collateral is located;
(h)a description of the off-balance sheet exposures of the entity, including a mapping to its critical operations and core business lines;
(i)the material hedges of the entity including a mapping to legal persons;
(j)identification of the major or most critical counterparties of the entity as well as an analysis of the impact of the failure of major counterparties in the entity’s financial situation;
(k)each system on which the entity conducts a material number or value amount of trades, including a mapping to the entity’s legal persons, critical operations and core business lines;
(l)each payment, clearing or settlement system of which the entity is directly or indirectly a member, including a mapping to the entity’s legal persons, critical operations and core business lines;
(m)a detailed inventory and description of the key management information systems, including those for risk management, accounting and financial and regulatory reporting used by the entity, including a mapping to the entity’s legal persons, critical operations and core business lines;
(n)an identification of the owners of the systems identified in paragraph (m), related service level agreements and any software and systems or licences, including a mapping to their legal entities, critical operations and core business lines;
(o)an identification and mapping of the legal persons and interconnections and interdependencies among the different legal persons such as—
(i)common or shared personnel, facilities and systems;
(ii)capital, funding or liquidity arrangements;
(iii)existing or contingent credit exposures;
(iv)cross guarantee agreements, cross-collateral arrangements, cross-default provisions and cross-affiliate netting arrangements;
(v)risks transfers and back-to-back trading arrangements and service level agreements;
(p)the competent authority for each legal person;
(q)the member of the management body responsible for providing the information necessary to prepare the plan as well as those responsible, if different, for the different legal persons, critical operations and core business lines;
(r)a description of the arrangements that the entity has in place to ensure that, in the event of resolution, the Bank will have all the necessary information, as determined by the Bank, for applying the resolution tools and resolution powers;
(s)all the agreements entered into by the entity with third parties the termination of which may be triggered by a decision of the authorities to apply a resolution tool and whether the consequences of termination may affect the application of the resolution tool;
(t)a description of possible liquidity sources for supporting resolution; and
(u)information on asset encumbrance, liquid assets, off-balance sheet activities, hedging strategies and booking practices.
Articles 60(2)(a) and 62(3)(a)
SCHEDULE 2BMatters that the Bank is to consider when assessing resolvability
1. In this Schedule—
(a)“back-to-back transaction” means a transaction entered into between two group entities for the purpose of transferring, in whole or in part, the risk generated by another transaction entered into between one of those group entities and a third party;
(b)“entity” means, in relation to an assessment of resolvability of—
(i)an institution in accordance with article 60(2)(a), the institution;
(ii)a relevant group in accordance with article 62(3)(a), the group entities;
(c)“intra-group guarantee” means a contract by which one group entity guarantees the obligations of another group entity to a third party.
2. The matters referred to in articles 60(2)(a) and 62(3)(a) are—
(a)the extent to which the entity is able to map core business lines and critical operations to legal persons;
(b)the extent to which legal and corporate structures are aligned with core business lines and critical operations;
(c)the extent to which there are arrangements in place to provide for essential staff, infrastructure, funding, liquidity and capital to support and maintain the core business lines and the critical operations;
(d)the extent to which the service agreements that the entity maintains are fully enforceable in the event of resolution of the entity;
(e)the extent to which the governance structure of the entity is adequate for managing and ensuring compliance with the entity’s internal policies with respect to its service level agreements;
(f)the extent to which the entity has a process for the transition of the services provided under service level agreements to third parties in the event of the separation of critical functions or of core business lines;
(g)the extent to which there are contingency plans and measures in place to ensure continuity in access to payment and settlement systems;
(h)the adequacy of the management information systems in ensuring that the Bank is able to gather accurate and complete information regarding the core business lines and critical operations so as to facilitate rapid decision making;
(i)the capacity of the management information systems to provide the information essential for the effective resolution of the entity at all times even under rapidly changing conditions;
(j)the extent to which the entity has tested its management information systems under stress scenarios as defined by the Bank;
(k)the extent to which the entity can ensure the continuity of its management information systems both for the affected entity and the new entity in the case that the critical operations and core business lines are separated from the rest of the operations and business lines;
(l)the extent to which the entity has established adequate processes to ensure that it provides the Bank with the information necessary to identify depositors and the amounts covered by the Financial Services Compensation Scheme established under Part 15 of FSMA in respect of deposits;
(m)where the entity uses intra-group guarantees, the extent to which those guarantees are provided at market conditions and the risk management systems concerning those guarantees are robust;
(n)where the entity engages in back-to-back transactions, the extent to which those transactions are performed at market conditions and the risk management systems concerning those transactions practices are robust;
(o)the extent to which the use of intra-group guarantees or back-to-back booking transactions increases contagion across the group;
(p)the extent to which the legal structure of the group inhibits the application of the resolution tools as a result of the number of legal persons, the complexity of the group structure or the difficulty in aligning business lines to group entities;
(q)the amount and type of eligible liabilities of the entity;
(r)where the assessment involves a mixed activity holding company, the extent to which the resolution of group entities that are institutions or financial institutions could have a negative impact on the non-financial part of the group;
(s)the existence and robustness of service level agreements;
(t)whether authorities in third countries have the resolution tools necessary to support resolution actions by the Bank, and the scope for coordinated action between the Bank and authorities in third countries.
(u)the feasibility of using resolution tools in such a way which meets the resolution objectives, given the resolution tools available and the entity’s structure;
(v)the extent to which the group structure allows the Bank to resolve the whole group or one or more of its group entities without causing a significant direct or indirect adverse effect on the financial system, market confidence or the economy and with a view to maximising the value or the group as a whole;
(w)the arrangements and means through which resolution could be facilitated in the case of groups that have subsidiaries established in different jurisdictions;
(x)the credibility of using resolution tools in such a way which meets the resolution objectives, given possible impacts on creditors, counterparties, customers and employees and possible actions that authorities in third countries may take;
(y)the extent to which the impact of the entity’s resolution on the financial system and on confidence in financial markets can be adequately evaluated;
(z)the extent to which the resolution of the entity could have a significant direct or indirect adverse effect on the financial system, market confidence or the economy;
(aa)the extent to which contagion to other institutions or to the financial markets could be contained through the application of the resolution tools and powers; and
(bb)the extent to which the resolution of the entity could have a significant effect on the operation of payment and settlement systems.”.