Banking Act 2009 (c. 1)

Part 1 U.K. Special Resolution Regime

Modifications etc. (not altering text)

C1 Pt. 1 restricted (7.1.2010) by Banking Act 2009 (Exclusion of Insurers) Order 2010 (S.I. 2010/35), arts. 1, 2

C2 Pt. 1: power to amend conferred (1.3.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 17(3)(f), 148(5); S.I. 2014/377, art. 2(1)(b), Sch. Pt. 2

[F1 Chapter 3 U.K. Special resolution action]

Textual Amendments

F1 Pt. 1 Ch. 3 formed from ss. 4-83 (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 7

[F2 Mandatory write-down, conversion etc of capital instruments U.K.

Textual Amendments

F2 Ss. 6A-6D and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 10

6A. Cases where mandatory write-down, conversion, etc applies U.K.

(1) Section 6B applies in relation to a bank in the cases set out in subsections (2) to (6).

(2) Case 1 is where—

(a) the conditions imposed by sections 7 to 9 on the exercise of a stabilisation power in respect of the bank are met,

(b) the Bank of England or the Treasury (as the case may be) has decided to exercise the power, and

(c) section 12AA (mandatory write-down etc in bail-in cases) does not apply.

(3) Case 2 is where—

(a) the PRA is satisfied that Condition 1 in section 7 is met in respect of the bank, and

(b) the Bank of England is satisfied that—

(i) (ignoring section 6B) Condition 2 in section 7 is met, and

(ii) that Condition will continue to be met unless the action required by section 6B is taken in respect of the bank.

(4) Case 3 is where—

(a) the bank is viable,

(b) it is a subsidiary,

(c) relevant capital instruments issued by it are recognised for the purpose of meeting own funds requirements on an individual basis and on a consolidated basis, and

(d) the appropriate authority of the EEA state in which the consolidating supervisor is situated and the Bank of England make a joint determination in accordance with Article 59.3(c) of the recovery and resolution directive that the group of which the bank is a member will not be viable unless the action required by section 6B is taken in relation to those instruments.

(5) Case 4 is where—

(a) the bank is a parent undertaking,

(b) relevant capital instruments issued by the bank are recognised for the purposes of meeting own funds requirements on an individual basis at the level of the parent undertaking or on a consolidated basis, and

(c) the Bank of England makes a determination that the group will not be viable unless the action required by section 6B is taken in relation to those instruments.

(6) Case 5 is where—

(a) extraordinary public financial support is required by the bank other than in circumstances where subsection (5E) of section 7 applies by virtue of paragraph (c) of that subsection, and

(b) the Bank of England is satisfied, on the basis of the valuation carried out in accordance with section 6E, that, in order for the bank to fulfil its own funds requirements, relevant capital instruments of the bank need to be written down or converted into Common Equity Tier 1 instruments (or both).

(7) For the purposes of Case 3, the bank is viable unless—

(a) the PRA is satisfied that the bank is failing or likely to fail (within the meaning of section 7(5C)), and

(b) having regard to timing and other relevant circumstances, the Bank of England is satisfied that it is not reasonably likely that (ignoring section 6B and the stabilisation powers) action will be taken by or in respect of the bank that will result in the bank no longer being a bank which is failing or likely to fail.

(8) For the purposes of Cases 3 and 4 a group is not viable if (and only if)—

(a) the consolidating supervisor is satisfied that a requirement under the capital requirements regulation that applies, on a consolidated basis, to a bank which is a member of the group is infringed (or will in the near future be infringed) in a way that justifies action by the consolidating supervisor, and

(b) having regard to timing and other relevant circumstances (but ignoring section 6B and the stabilisation powers), it is not reasonably likely that action will be taken by or in respect of the bank that will prevent the requirement being infringed.

(9) In this section—

• “appropriate authority” means the authority authorised, under the law of the EEA state mentioned in paragraph (d) of subsection (4), to enter into the joint determination mentioned in that paragraph,

• “consolidated basis” has the meaning given by Article 2.1(7) of the recovery and resolution directive,

• “consolidating supervisor” means a consolidating supervisor as defined in Article 4.1(41) of the capital requirements regulation,

• “group” has the meaning given in section 3(2)(b),

• “parent undertaking” has the meaning given by Article 4.1(15)(a) of the capital requirements regulation, and

• “subsidiary” has the meaning given by Article 4.1(16) of the capital requirements regulation.]