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PART 10U.K.Requirement to write down or convert capital instruments

Application and interpretation of PartU.K.

149.—(1) This Part applies in relation to a relevant group.

(2) In this Part—

“alternative measure” means—

(a)

a measure for early intervention within the meaning given in Chapter 1 of Part 8;

(b)

[F1a power of the FCA or PRA by or under legislation upon which the United Kingdom relied immediately before IP completion day to meet its obligations with respect to] Article 104.1 of the capital requirements directive (supervisory powers); or

(c)

a transfer of funds or capital from a parent undertaking;

F2...

“Case 2”—

(a)

in relation to a bank, means Case 2 set out in subsection (3) of section 6A of the Banking Act 2009 (cases where mandatory write-down, conversion, etc applies);

(b)

in relation to a banking group company, means Case 2 set out in subsection (4) of section 81AA of that Act M1 (cases where mandatory write-down, conversion, etc applies: banking group companies);

“Case 3”, in relation to a bank, means Case 3 set out in section 6A(4) of that Act;

“Case 4”, in relation to a bank, means Case 4 set out in section 6A(5) of that Act;

“Case 5”—

(a)

in relation to a bank, means Case 5 set out in section 6A(6) of that Act;

(b)

in relation to a banking group company, means Case 3 set out in section 81AA(8) of that Act;

F2...

“recognised capital instruments” means Common Equity Tier 1 instruments, Additional Tier 1 instruments or Tier 2 instruments which have been recognised for the purpose of meeting the own funds requirements (within the meaning given in section 3(1) of the Banking Act 2009 M2) of institutions on an individual and a consolidated basis; and

“UK group entity” means a group entity which is a bank or banking group company and has issued recognised capital instruments.

(3) In this article, for the interpretation of expressions defined in paragraph (2)—

Textual Amendments

Marginal Citations

M1Sections 6A and 81AA were inserted by S.I. 2014/3329.

M2Section 3 was amended by the Financial Services Act 2012, section 96(2) and Schedule 17, paragraphs 1 and 4, and by S.I. 2014/3329, which inserted the definition of “own funds requirements”.

M3These definitions were inserted by S.I. 2014/3329.

M4Section 2 was amended by the Financial Services Act 2012, sections 101(1) and (3) and 102(1) and (3) and Schedule 17, paragraph 3, and by S.I. 2011/2832.

M5Section 258A was inserted by the Financial Services Act 2012, section 101(1) and (7). See S.I. 2014/1832, which was made under subsection (2)(b). No other order has been made under that subsection.

M6Section 81D was inserted by the Financial Services Act 2012, section 100(5); and was amended by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 7(3), and by S.I. 2014/3329.

Determinations [F4under section 6A and 81AA of the Banking Act 2009]: preliminary steps for UK group entitiesU.K.

150.—(1) Before the Bank makes a determination that Case 2, 4 or 5 is satisfied in relation to a UK group entity, the Bank must give notice that it is considering whether to make that determination (“a Case 2, 4 or 5 notice”) without delay [F5to the appropriate regulator].

(2) Before the Bank makes a determination F6... that Case 3 is satisfied in relation to a UK group entity, the Bank must give notice that it is considering whether to make that determination (“a Case 3 notice”) without delay [F7to the appropriate regulator].

(3) Where the Bank gives a Case 2, 4 or 5 notice or a Case 3 notice, it must—

(a)send with the notice an explanation of its reasons for considering whether to make the determination concerned; and

(b)after consulting the authorities to which the notice has been given assess whether—

(i)any alternative measure is available;

(ii)any alternative measure which is available could feasibly be taken; and

(iii)there is any reasonable prospect that any alternative measure which is available and could feasibly be taken would, within a reasonable time, avoid the need for the determination.

F8(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Regulator to take alternative measuresU.K.

151.—(1) Where, in the Bank's assessment, there is a reasonable prospect that an alternative measure which is available and could feasibly be taken would, within a reasonable time, avoid the need for the determination referred to in a Case 2, 4 or 5 notice or a Case 3 notice—

(a)the Bank must notify the regulator of that fact; and

(b)except where the measure is a transfer of funds from a parent undertaking, the regulator must take the alternative measure in exercise of its powers under FSMA.

(2) In this article “the regulator”—

(a)where there is a PRA-authorised person and any other UK authorised person in the relevant group, means the PRA and the FCA;

(b)where there is a PRA-authorised person and no other UK authorised person in the relevant group, means the PRA;

(c)where there is no PRA-authorised person in the relevant group, means the FCA.

Determination that Case 2, 3, 4 or 5 is satisfiedU.K.

152.—(1) This article applies where, in the Bank's assessment, there is no reasonable prospect that any alternative measure which is available and could feasibly be taken would, within a reasonable time, avoid the need for the determination referred to in a Case 2, 4 or 5 notice or a Case 3 notice.

(2) F9... The Bank must decide whether to make the determination referred to in the notice.

F10(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Joint determination under Article 59(3)(c) of the recovery and resolution directive in relation to a non-UK group entityU.K.

F11153.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments