The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020

Groups: bail-in option: holding companies

18.  In section 81C (section 81B or 81ZBA: supplemental)(1)—

(a) in subsection (1A) after paragraph (a) insert—

“(aa) where Case 4 in section 81AA applies, section 6B(2) is to be read as providing that “the mandatory reduction provision” is provision which, together with the mandatory reduction provision made in respect of any other subsidiary of the resolution entity that is in the same resolution group as the banking group company, produces the results referred to in subsection (1AA) of this section,”;

(b) after subsection (1A) insert—

“(1AA) The results are that—

(a) the principal amount of the relevant capital instruments or relevant internal liabilities of the banking group company is reduced, or

(b) such instruments or liabilities of the banking group company are converted (directly or indirectly) into Common Equity Tier 1 instruments,

(or both (a) and (b)) in accordance with the principle that losses of the bank referred to in relation to that banking group company in section 81AA(8A)(a) are effectively passed on to, and the bank is recapitalised by, the resolution entity that is in the same resolution group as the banking group company.”;

(c) in section 81C(2), for “or 81ZBA” substitute “, 81ZZBA, 81ZBA or 81ZBB”.

(1)

Section 81C was inserted by S.I. 2014/3329.