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Banking Act 2009

Type Public General Act

Publication 2009-02-12

Last updated 2026-01-19

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

“relevant MAHC” means a mixed activity holding company (within the meaning given by Article 4.1(22) of the capital requirements regulation) which has at least one subsidiary which—is an institution, andis not a subsidiary of a financial holding company which is also a subsidiary of the mixed activity holding company; and

“subsidiary” means a subsidiary undertaking within the meaning given by section 1162 of the Companies Act 2006.

3B

(1) A direction given to a relevant person under section 3A must be accompanied by a notice which—

(a) states when the direction takes effect (see subsections (2) and (3)),

(b) gives the Bank of England’s reasons for giving the direction, and,

(c) specifies a reasonable period within which the relevant person may make representations to the Bank about the direction.

(2) The direction may, if the Bank of England reasonably considers it necessary, take effect—

(a) immediately it is given to the relevant person, or

(b) on a later date specified in the direction.

(3) In any other case the direction takes effect when—

(a) it has been confirmed by a notice under subsection (5), and

(b) the period during which the direction may be referred to the Upper Tribunal (under subsection (6)) has expired and, if the matter was so referred, the reference and any appeal against the Tribunal’s determination, has been finally disposed of.

(4) Where representations are made by the relevant person within the period specified under subsection (1)(c), the Bank must, within a reasonable period, consider those representations and decide—

(a) whether to confirm or revoke the direction, and

(b) if the direction is revoked, whether to give a different direction.

(5) The Bank must—

(a) if no representations are made within that specified period, give the relevant person written notice that the direction is confirmed, and

(b) if representations are made, give the relevant person written notice of its decision under subsection (4).

(6) If the relevant person is aggrieved by the confirmation of the direction, that person may refer the matter to the Upper Tribunal.

(7) A notice under subsection (5)(a) or (b) confirming the direction must—

(a) inform the relevant person of the right to refer the matter to the Upper Tribunal, and

(b) indicate the procedure on such a reference.

(8) A notice given under subsection (5)(b) of a decision by the Bank to give a different direction must comply with subsection (1).

(9) The Bank must prepare one or more statements of its policy with respect to the giving of directions under section 3A.

(10) No power conferred by section 3A may be exercised before the statement of policy in relation to the exercise of that power has been published.

Chapter 3 — Special resolution action

Mandatory write-down, conversion etc of capital instruments

6A

(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

(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 Bank of England makes a determination 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 ... 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 regulationor CRR rules 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—

“on a consolidated basis” means on the basis of the consolidated situation,

“consolidated situation” means the situation that results from an entity being treated, for the purposes of the capital requirements regulation or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity,

“consolidating supervisor” means supervisor responsible for the exercise of supervision of an entity on a consolidated basis,

“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.

6B

(1) In a case where this section applies, the Bank of England must without delay make—

(a) an instrument in relation to the bank containing the mandatory reduction provision, or

(b) two or more instruments which (taken together) contain that provision.

6C

(1) Where the principal amount of a relevant capital instrument or a relevant internal liability is reduced under section 6B—

(a) the reduction must be permanent, subject to any provision made by virtue of section 48Y(1)(a);

(b) no liability to the holder of the relevant capital instrument or the relevant internal liability remains under, or in connection with, so much of the amount of the instrument or relevant internal liability as constitutes the reduction, except for—

(i) any liability already accrued in a case where the principal amount of the instrument or the relevant internal liability is not reduced or converted (or both) to the full extent of its capacity, and

(ii) any liability for damages that may arise as a result of any challenge to the legality of the exercise of the power of reduction;

(c) no compensation is to be paid to any holder of the relevant capital instrument or the relevant internal liability other than in accordance with subsection (4).

(2) Nothing in subsection (1)(b) prevents the provision of Common Equity Tier 1 instruments to a holder of relevant capital instruments or relevant internal liabilities in accordance with subsection (4).

(3) In order to effect a conversion of relevant capital instruments or relevant internal liabilities under section 6B, the Bank of England may require the bank, or a UK parent undertaking, to issue Common Equity Tier 1 instruments to the holders of the relevant capital instruments or relevant internal liabilities.

(4) The relevant capital instruments or relevant internal liabilities may only be so converted if—

(a) the Common Equity Tier 1 instruments are issued by the bank, or by a UK parent undertaking of the bank with the agreement of the Bank of England,

(b) the Common Equity Tier 1 instruments are issued prior to the issue of any shares by the bank, or by a parent undertaking of the bank, for the purposes of provision of own funds by the Treasury,

(c) the Common Equity Tier 1 instruments are awarded and transferred without delay following the exercise of the conversion power, and

(d) the conversion rate that determines the number of Common Equity Tier 1 instruments that are provided in respect of each relevant capital instrument or relevant internal liability represents appropriate compensation to the affected creditor for any loss incurred in consequence of the conversion of that instrument or liability.

(4A) Where different conversion rates are applied to different classes of instrument or liability, a lower conversion rate must be applied to subordinated debt than is applied to debts ranking higher in the hierarchy of claims in normal insolvency proceedings.

(5) For the purposes of the provision of Common Equity Tier 1 instruments in accordance with subsections (2), (3) and (4), the Bank of England may require the bank or a UK parent undertaking of the bank to maintain at all times the necessary prior authorisation to issue the relevant number of Common Equity Tier 1 instruments.

(6) Before making a mandatory reduction instrument, the Bank must consult—

(a) the PRA,

(b) the FCA, and

(7) In this section—

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

“UK parent undertaking” means a parent undertaking that is incorporated in, or formed under the law of, any part of the United Kingdom.

6D

(1) The following provisions apply in relation to a mandatory reduction instrument as they apply to a resolution instrument—

(a) section 48L(3) and (5) (powers relating to securities issued by the bank),

(b) section 48O (power to direct directors of the bank),

(d) section 48R (execution and registration of instruments etc),

(e) section 48S (general matters), and

(f) section 48T (procedure).

(2) Where the Bank of England makes one or more mandatory reduction instruments in respect of a bank, the Bank must, on request by the Treasury, report to the Chancellor of the Exchequer about—

(a) the exercise of the power to make a mandatory reduction instrument,

(b) the activities of the bank, and

(3) In relation to the matters in subsection (2)(a) and (b), the report must comply with any requirements that the Treasury may specify.

(4) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.

Valuation before mandatory write-down of capital or stabilisation action

6E

(1) Before the Bank of England makes a mandatory reduction instrument or exercises any stabilisation power in respect of a bank, it must ensure that the assets and liabilities of the bank are valued.

(2) Unless subsection (3) applies, the Bank of England must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a valuation for the purposes of subsection (1).

(3) Where the Bank of England considers that the urgency of the case makes it appropriate to make a mandatory reduction instrument, or exercise a stabilisation power, before a valuation can be carried out by a person appointed in accordance with subsection (2), the Bank may carry out a provisional valuation of the assets and liabilities of the bank for the purposes of subsection (1).

(4) The purpose of a valuation carried out pursuant to subsection (1) is to—

(a) inform the decision as to—

(i) whether the conditions for the making of a mandatory reduction instrument or the exercise of a stabilisation power is satisfied,

(ii) which stabilisation option should be employed,

(iii) the extent to which any shares, capital instruments or eligible liabilities should be cancelled, diluted, transferred, written down or converted through the use of a mandatory reduction instrument or a resolution instrument,

(iv) what assets, liabilities or securities (if any) are to be transferred by a property transfer instrument or a share transfer instrument, and

(v) the value of any consideration to be paid to the bank or the owners of the securities for any assets, liabilities or securities so transferred, and

(b) ensure that the full extent of any losses on the assets of that bank is appreciated at the time the Bank of England makes a mandatory reduction instrument or exercises a stabilisation power.

(5) In carrying out a valuation required under subsection (1), the person carrying out the valuation must—

(a) make prudent assumptions as to possible rates of default and the severity of losses suffered by the bank,

(b) disregard potential financial assistance which may be provided by the Bank of England or the Treasury after the Bank has made any mandatory reduction instrument or exercised any stabilisation power (except for ordinary market assistance offered by the Bank on its usual terms),

(i) the Bank of England and the Treasury may recover expenses incurred in connection with the exercise of a stabilisation power under section 58(2)(b),

(ii) the Bank of England and the Treasury may charge interest or fees in respect of any loans or guarantees provided to the bank after the Bank has made any mandatory reduction instrument or exercised any stabilisation power in respect of it.

(6) The valuation carried out under this section must follow the methodology specified in—

(a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are assimilated law, or

(b) technical standards made under subsection (11)(a).

(7) A valuation under subsection (1) must be accompanied by—

(a) a balance sheet of the bank as at the date of the valuation,

(b) a report on the financial position of the bank,

(d) a list of the outstanding liabilities of the bank (including any off-balance sheet liabilities), with the creditors subdivided into classes according to the priority their claims would receive in insolvency proceedings, and

(e) an estimate of the amount that each class of creditors and shareholders might be expected to receive if the bank went into insolvent liquidation.

(8) Where appropriate, the information in subsection (7)(c) may be supplemented by an analysis and estimate of the value of the assets and liabilities of the bank on a market value basis in order to inform the decision referred to in paragraph (a)(iv) or (v) of subsection (4).

(9) Where a provisional valuation is carried out under subsection (3), the Bank need only comply with subsection (7) as far as it is reasonable to do so in the circumstances.

(10) A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the bank in accordance with—

(a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are assimilated law, or

(b) technical standards made under subsection (11)(b).

(11) The Bank of England may make technical standards relating to—

(a) the methodology for assessing the value of the assets and liabilities of a bank for the purposes of a valuation under this section;

(b) the methodology for calculating and including a buffer for additional losses in the provisional valuation.

7A

(1) Where the Bank of England is considering the imposition of a requirement under section 3A(2), (4), (4B)(b), (5) or (6), the Bank must consult the PRA and the FCA, and have regard to the potential impact of the requirement on—

(a) the institution in question,

(b) the market for financial services within the United Kingdom, and

(1A) Subsection (1) does not apply in relation to a requirement under section 3A(4) for a person to maintain (but not issue) a particular kind of bail-in liability.

(2) Where the Bank of England is considering the exercise of a stabilisation power in respect of a bank which is a member of a group, the Bank must have regard to—

(a) the need to minimise the effect of the exercise of the power on other undertakings in the same group,

(b) the need to minimise any adverse effects on the financial stability of the United Kingdom, and

(c) the potential effect of the exercise of the power on the financial stability of countries other than the United Kingdom (particularly those ... countries in which any member of that group is operating).

(3) In this section “group” has the meaning given by section 474 of the Companies Act 2006.

8ZA

(1) The Bank of England may exercise a stabilisation power in respect of a bank in accordance with section 12ZA(3) only if satisfied that Conditions A and B are met.

(2) Condition A is that the power is exercised in connection with the exercise of one or more stabilisation powers in respect of the bank, or a company which is a banking group company in relation to the bank, otherwise than for the purposes of the third stabilisation option.

(3) Condition B is that the Bank of England is satisfied that—

(a) the situation of the market for the assets which it is proposed to transfer by the exercise of the stabilisation power is of such a nature that the liquidation of those assets under normal insolvency proceedings could have an adverse effect on one or more financial markets,

(b) the transfer is necessary to ensure the proper functioning of the bank or bridge bank from which the transfer is to be made, or

(4) Before determining whether Conditions A and B are met, and if so how to react, the Bank of England must consult—

(a) the PRA,

(b) the FCA, and

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

(6) The conditions in this section are in addition to the conditions in sections 7 and 8.

8A

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12ZA

(1) The third stabilisation option is to transfer all or part of the business of—

(a) the bank, or

(b) a bridge bank to which shares or property, rights or liabilities of the bank have been transferred under section 12,

to an asset management vehicle.

(2) An “asset management vehicle” is an undertaking which—

(a) is wholly or partially owned (directly or indirectly) by the Bank of England or the Treasury,

(b) is controlled by the Bank of England, and

(c) is created for the purpose of receiving some or all of the assets, rights and liabilities of one or more banks or of one or more bridge banks (or both).

(3) For the purpose of subsection (1) the Bank of England may make one or more property transfer instruments.

(4) An asset management vehicle must manage the assets transferred to it with a view to maximising their value through eventual sale or orderly wind down.

(5) The code of practice under section 5 must include provision about the management and control of asset management vehicles including, in particular, provision about—

(a) setting objectives,

(b) the content of the articles of association,

(d) different arrangements for management and control at different stages, and

(e) eventual disposal.

(6) Where property, rights or liabilities are transferred to an asset management vehicle pursuant to the third stabilisation option, the Bank of England may make one or more supplemental property transfer instruments transferring any of that property, or those rights or liabilities, to one or more other asset management vehicles.

12A

(1) The fourth stabilisation option is exercised by the use of the power in subsection (2).

(2) The Bank of England may make one or more resolution instruments.

(2A) A resolution instrument may contain provision or proposals of any kind mentioned in subsections (3) to (6).

(2B) The power in subsection (2) must be exercised in accordance with section 12AA.

(2C) When the Bank of England exercise that power, at least one resolution instrument must include provision under section 48H(1) (business reorganisation plan).

(3) A resolution instrument may—

(a) make special bail-in provision with respect to a specified bank;

(b) make other provision for the purposes of, or in connection with, any special bail-in provision made by that or another instrument.

(4) A resolution instrument may—

(a) provide for securities issued by a specified bank to be transferred to a resolution administrator (see section 62B) or another person;

(b) make other provision for the purposes of, or in connection with, the transfer of securities issued by a specified bank (whether or not the transfer has been or is to be effected by that instrument, by another resolution instrument or otherwise).

(5) A resolution instrument may set out proposals with regard to the future ownership of a specified bank or of the business of a specified bank, and any other proposals (for example, proposals about making special bail-in provision) that the Bank of England may think appropriate.

(6) A resolution instrument may make any other provision the Bank of England may think it appropriate to make in exercise of specific powers under this Part.

(7) Provision made in accordance with subsection (4) may relate to—

(a) specified securities, or

(b) securities of a specified description.

(8) Where the Bank of England has exercised the power in subsection (4) to transfer securities to a resolution administrator, the Bank of England must exercise its functions under this Part (see, in particular, section 48V) with a view to ensuring that any securities held by a person in the capacity of a resolution administrator are so held only for so long as is, in the Bank of England's opinion, appropriate having regard to the special resolution objectives.

(9) References in this Part to “special bail-in provision” are to provision made in reliance on section 48B.

12AA

(1) When the Bank of England exercises the fourth stabilisation option, it must use the powers conferred by sections 12A, 48B to 48W and 48Z and this section in a way which ensures that—

(a) existing Common Equity Tier 1 instruments of the bank are cancelled, transferred or diluted in accordance with the principle that losses should be borne first by the holders of such instruments,

(b) the principal amount of Additional Tier 1 instruments is reduced or converted (directly or indirectly) into Common Equity Tier 1 instruments (or both), to the extent of the capacity of the Additional Tier 1 instruments,

(c) the principal amount of Tier 2 instruments is reduced or converted (directly or indirectly) into Common Equity Tier 1 instruments (or both), to the extent of the capacity of the Tier 2 instruments,

(d) where the total of any reduction or conversion pursuant to paragraphs (b) and (c) is less than the shortfall amount, the principal amount of subordinated debt that is not within either of those paragraphs is—

(i) reduced or converted (directly or indirectly) into shares or other securities, or both reduced and so converted, in accordance with the hierarchy of claims in normal insolvency proceedings, by the difference or to the extent of the capacity of those instruments, whichever is lower, and

(ii) losses are born by the holders of shares of the bank that are not within paragraph (a), (b) or (c) in accordance with the hierarchy of claims in normal insolvency proceedings,

(e) where the total of any reduction or conversion pursuant to paragraphs (b), (c) and (d), and any reduction or conversion pursuant to subsection (6), is less than the shortfall amount, the principal amount of, or outstanding amount payable in respect of, the remaining bail-in liabilities is reduced or converted (directly or indirectly) into shares or other securities, or both reduced and so converted, in accordance with the hierarchy of claims in normal insolvency proceedings, by the difference or to the extent of their capacity, whichever is lower.

(2) In this section—

“the shortfall amount” means the sum of the amounts referred to in Article 47.3(b) and (c) of the resolution and recovery directive less the amount of any recapitalisation payment required under section 214E of the Financial Services and Markets Act 2000 in relation to the bank in question.

(3) Subsections (1) to (4) of section 6C apply for the purpose of this section as if references in those subsections to section 6B were references to subsection (1)(a) to (c) of this section.

(4) When complying with subsection (1)(d) and (e), the Bank of England must allocate the losses represented by the shortfall amount equally between bail-in liabilities of the same rank by reducing the principal amount of, or outstanding amount payable in respect of, those bail-in liabilities to the same extent in proportion to their value, except where a different allocation of losses amongst liabilities of the same rank is allowed by virtue of section 48B(10) and (11).

(5) Subsection (4) does not prevent excluded liabilities (as defined by section 48B(7A)) from receiving more favourable treatment than bail-in liabilities which are of the same rank in normal insolvency proceedings.

(6) The Bank may take the action required by subsection (1)(e) only if it converts or reduces the principal amount of any instruments referred to in subsection (1)(d) which contain—

(a) terms that provide for the principal amount of the instrument to be reduced on the occurrence of any event that refers to the financial situation, solvency or levels of own funds of the bank, or

(b) terms that provide for the conversion of the instruments to shares on the occurrence of any such event,

in accordance with those terms.

(7) Where the principal amount of an instrument has been reduced, but not to zero, in accordance with terms of the kind referred to in subsection (6)(a) before the application of the bail-in option, the Bank must take the action required by subsection (1) in relation to the residual amount of that principal.

(8) When taking the action required by subsection (1), the Bank must not convert or reduce one class of liabilities while a class of liabilities that is subordinated to that class remains substantially unconverted or the principal amount of those liabilities is not reduced to nil.

(9) For the purpose of subsection (8), excluded liabilities within the meaning of section 48B(7A) are to be ignored.

(10) For the purposes of this section “existing” Common Equity Tier 1 instruments includes Common Equity Tier 1 instruments issued or conferred in the following circumstances—

(a) pursuant to conversion of debt instruments to Common Equity Tier 1 instruments in accordance with contractual terms of the original debt instruments on the occurrence of an event that preceded, or occurred at the same time as, the assessment by the Bank of England that the bank met the conditions in section 7;

(b) pursuant to any previous conversion of relevant capital instruments to Common Equity Tier 1 instruments in accordance with section 6B.

12B

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29A

In this Act “resolution company” means a bridge bank or an asset management vehicle.

39B

(1) A property transfer instrument may provide for the listing of securities, under section 74 of the Financial Services and Markets Act 2000, to be discontinued or suspended.

(2) Where the listing of securities is suspended in accordance with a property transfer instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, the Financial Services and Markets Act 2000 as still being listed.

41A

(1) This section applies where the Bank of England has made a resolution instrument.

(2) The Bank of England may make one or more property transfer instruments in respect of property, rights or liabilities of the bank.

(3) Section 7 does not apply to a property transfer instrument under subsection (2).

(4) Before making a property transfer instrument under subsection (2) the Bank of England must consult—

(a) the PRA,

(b) the FCA, and

44A

(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 41A(2) (“the original instrument”).

(2) The Bank of England may make one or more bail-in reverse property transfer instruments in respect of property, rights or liabilities of the transferee under the original instrument.

(3) A bail-in reverse property transfer instrument is a property transfer instrument which—

(a) provides for a transfer to the transferor under the original instrument;

(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, or could be or could have been, transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

(4) The Bank of England may make a bail-in reverse property transfer instrument only with the written consent of the transferee under the original instrument.

(5) Section 7 does not apply to a bail-in reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(6) Before making a bail-in reverse property transfer instrument the Bank of England must consult—

(a) the PRA,

(b) the FCA, and

(7) Section 42 (supplemental instruments) applies where the Bank of England has made a bail-in reverse property transfer instrument.

44B

(1) A property transfer instrument within subsection (2) may make special bail-in provision with respect to the bank (see section 48B) .

(2) The instruments referred to in subsection (1) are—

(a) a property transfer instrument under section 11(2), 12(2), 12ZA(3) or 41A(2),

(b) a supplemental property transfer instrument under section 42 in relation to which the original instrument is—

(i) a property transfer instrument under section 11(2), 12(2), 12ZA(3) or 41A(2),

(ii) an onward property transfer instrument under section 43(2), or

(iii) a bridge bank supplemental property transfer instrument under section 44D(2),

(d) a bridge bank supplemental property transfer instrument under section 44D(2).

(3) In the case of—

(a) a property transfer instrument under section 12(2) or 12ZA(3),

(b) a supplemental property transfer instrument under section 42 in relation to which the original instrument is—

(i) a property transfer instrument under section 12(2) or 12ZA(3),

(ii) an onward property transfer instrument under section 43(2), or

(iii) a bridge bank supplemental property transfer instrument under section 44D(2),

(d) a bridge bank supplemental property transfer instrument under section 44D(2),

the power under subsection (1) to make the provision described in section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes power to make the provision referred to in subsection (3A).

(3A) The provision referred to in subsection (3) is provision replacing a liability (of any form)—

(a) of the bank, in the case of the instruments within subsection (3)(a) and (b)(i),

(b) of the resolution company mentioned in section 43(1), in the case of the instruments within subsections (3)(b)(ii) and (c), or

(c) of the bridge bank mentioned in section 44D(1), in the case of the instruments within subsections (3)(b)(iii) and (d),

with a relevant security (of any form or class).

(3B) The following are relevant securities for the purpose of subsection (3A)—

(a) in any case, a security of the bank,

(b) where the instrument within subsection (3)(a), or the original instrument, is made under section 12, a security of the bridge bank mentioned in section 12(1),

(c) where the instrument within subsection (3)(a), or the original instrument, is made under section 12ZA, a security of the asset management vehicle mentioned in section 12ZA(1).

(3C) In subsection (3B) references to the original instrument are—

(a) in relation to an instrument within subsection (3)(b), the original instrument referred to in that paragraph,

(b) in relation to an instrument within subsection (3)(c), the original instrument as defined in section 43(1),

(4) Where securities of the bridge bank or asset management vehicle (“B”) are, as a result of subsection (3), held by a person other than the Bank of England, that does not prevent B from being regarded for the purposes of this Part (see particularly section 12(1A) and 12ZA(2)) as being wholly owned by the Bank of England, as long as the Bank of England is entitled to exercise, or control the exercise of, voting rights in respect of all the ordinary shares issued by B.

44C

(1) This section applies where the Bank of England makes a property transfer instrument containing provision made in reliance on section 44B.

(2) The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision was made in the case of the liabilities concerned.

(3) If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.

(4) The insolvency treatment principles are that where an instrument includes special bail-in provision—

(a) the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and

(b) any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.

(5) A report must comply with any other requirements as to content that may be specified by the Treasury.

(6) A report must be made as soon as reasonably practicable after the making of the property transfer instrument to which it relates.

(7) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.

Replacement of provisional valuation

48X

(1) Where the Bank of England has carried out a provisional valuation under section 6E(3) before making a mandatory reduction instrument or exercising a stabilisation power, the Bank must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a full valuation in accordance with this section as soon as reasonably practicable.

(2) The purpose of the valuation carried out under subsection (1) is to—

(a) ensure the full extent of any losses on the assets of the bank is recognised in the accounting records of the bank, and

(b) inform a decision by the Bank as to whether—

(i) additional consideration should be paid by a bridge bank or asset management vehicle for any property, rights or liabilities transferred by a property transfer instrument, or securities transferred by a share transfer instrument, or

(ii) the Bank should exercise the power under section 48Y(1) to increase or reinstate any liability which has been reduced or cancelled by a resolution instrument.

(3) A valuation carried out under subsection (1) must comply with subsections (5) and (6) of section 6E, and be accompanied by the information required in subsection (7) of that section.

48Y

(1) Where the independent valuation carried out under section 48X(1) produces a higher valuation of the net asset value of the bank than a provisional valuation carried out under section 6E(3), the Bank of England may—

(a) modify any liability of the bank which has been reduced, deferred or cancelled by a mandatory reduction instrument or a resolution instrument so as to increase or reinstate that liability; or

(b) instruct a resolution company to pay additional consideration—

(i) to the bank for any property, rights or liabilities transferred to the resolution company by a property transfer instrument, or

(ii) to the previous holders of securities issued by the bank for any securities transferred to the resolution company by a share transfer instrument.

(2) The power in subsection (1)(a)—

(a) may not be exercised so as to increase the value of the liability beyond the value it would have had if the resolution instrument which reduced, cancelled or deferred it had not been made, and

(b) must be exercised by a mandatory reduction instrument or supplemental resolution instrument (whether or not that instrument contains any other provision authorised by this Part).

Termination rights etc

48Z

(1) In this section—

“crisis management measure” has the meaning given in Article 2.1(102) of the recovery and resolution directive, and accordingly in relation to the United Kingdom means—the exercise of a stabilisation power in relation to the bank by the Bank of England or the Treasury,the appointment of a resolution administrator under section 62B,the recognition by the Bank of England of third-country resolution action (or part of such action) in accordance with Chapter 5 of this Part, orthe exercise by the Bank of a stabilisation power by virtue of section 89I(3) (exercise of powers in support of third-country resolution action);

“crisis prevention measure” ... means—the imposition by the PRA or the FCA under the Bank Recovery and Resolution (No 2) Order 2014 (SI 2014/3348) of a requirement to take relevant measures as described in article 15, 16, or 23 of that Order,,the imposition by the Bank of England of a requirement to take measures to remove impediments to resolvability under section 3A, the taking by the FCA or the PRA of a measure for early intervention under article 111 of the Bank Recovery and Resolution (No. 2) Order 2014, the making of a mandatory reduction instrument by the Bank of England under section 6B , or the appointment by the PRA or the FCA of a person to act as a temporary manager under section 71C of the Financial Services and Markets Act 2000 ;

“default event provision” means a Type 1 or Type 2 default event provision (see subsections (2) and (3));

“group” has the meaning given by section 474 of the Companies Act 2006;

“Part 1 instrument” means—a mandatory reduction instrument,a share transfer instrument,a property transfer instrument, ora resolution instrument.

“recognised third-country resolution action” means third-country resolution action, or a part of such action, recognised by the Bank of England in an instrument under section 89H(2);

“third-country institution” means an institution established in a country or territory other than the United Kingdom that would, if it were established within the United Kingdom, be regarded as a bank, building society, credit union or investment firm;

“third-country parent financial holding company” means a parent financial holding company (within the meaning of Article 4.1(30) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;

“third-country parent institution” means a parent institution (within the meaning of Article 4.1(28) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;

“third-country parent mixed financial holding company” means a parent mixed financial holding company (within the meaning of Article 4.1(32) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;

“third-country parent undertaking” means a third-country parent institution, a third-country parent financial holding company or a third-country parent mixed financial holding company.

(2) A Type 1 default event provision is a provision of a contract or other agreement that has the effect that if a specified event occurs or situation arises—

(a) the agreement is terminated, modified or replaced,

(b) rights or duties under the agreement are terminated, modified or replaced,

(d) a right accrues to terminate, modify or replace rights or duties under the agreement,

(e) a sum becomes payable or ceases to be payable,

(f) delivery of anything becomes due or ceases to be due,

(g) a right to claim a payment or delivery accrues, changes or lapses,

(h) any other right accrues, changes or lapses, or

(i) an interest is created, changes or lapses.

(3) A Type 2 default event provision is a provision of a contract or other agreement that has the effect that a provision of the contract or agreement—

(a) takes effect only if a specified event occurs or does not occur,

(b) takes effect only if a specified situation arises or does not arise,

(d) has effect only while a specified situation lasts,

(e) applies differently if a specified event occurs,

(f) applies differently if a specified situation arises, or

(g) applies differently while a specified situation lasts.

(4) For the purposes of subsections (2) and (3) it is the effect of a provision that matters, not how it is described (nor, for example, whether it is presented in a positive or a negative form).

(5) Subject to subsection (6A), subsection (6) applies where a contract or other agreement—

(a) is entered into by a bank, a third-country institution or a third-country parent undertaking,

(b) is entered into by a subsidiary undertaking of a bank, a third-country institution or a third-country parent undertaking, whose obligations are guaranteed by a company which is a member of the same group as the bank, third-country institution or third-country parent undertaking, or

(c) is entered into by an undertaking which is a member of the same group as a bank, third-country institution, or third country parent undertaking,

and the substantive obligations provided for in the contract or agreement (including payment and delivery obligations and provision of collateral) continue to be performed.

(6) The following are to be disregarded in determining whether a default event provision applies—

(a) a crisis prevention measure, crisis management measure or recognised third-country resolution action taken in relation to the bank, third country institution or a member of the same group as the bank or third country institution, and

(b) the occurrence of any event directly linked to the application of such a measure or action.

(6A) A Part 1 instrument or share transfer order may provide for subsection (6)—

(a) not to apply in relation to a contract or other agreement, or

(b) to apply in relation to a contract or other agreement only to the extent specified by the Bank of England in the instrument or by the Treasury in the order.

(6B) Provision may be made under subsection (6A) only if the Bank of England (in the case of a Part 1 instrument) or the Treasury (in the case of a share transfer order) consider that such provision would advance one or more of the special resolution objectives.

(7) A Part 1 instrument or share transfer order may provide for subsection (8) or (9) to apply (but need not apply either) in circumstances where subsection (6) would not apply.

(8) If this subsection applies, the Part 1 instrument or share transfer order is to be disregarded in determining whether a default event provision applies.

(9) If this subsection applies, the Part 1 instrument or share transfer order is to be disregarded in determining whether a default event provision applies except so far as the instrument or order provides otherwise.

(10) In subsections (7), (8) and (9) a reference to the Part 1 instrument or share transfer order is a reference to—

(a) the making of the instrument or order,

(b) anything that is done by the instrument or order or is to be, or may be, done under or by virtue of the instrument or order, and

(c) any action or decision taken or made under this or another enactment in so far as it resulted in, or was connected to, the making of the instrument or order.

(11) Provision under subsection (7) may apply subsection (8) or (9)—

(a) generally or only for specified purposes, cases or circumstances, or

(b) differently for different purposes, cases or circumstances.

(12) A thing is not done by virtue of a Part 1 instrument or share transfer order for the purposes of subsection (10)(b) merely by virtue of being done under a contract or other agreement rights or obligations under which have been affected by the instrument or order.

52A

(1) Subsection (2) applies if the Bank of England makes—

(a) a resolution instrument under section 12A(2), or

(b) a property transfer instrument under section 41A(2).

(2) The Treasury must make a bail-in compensation order (see section 49(2A)).

(3) A bail-in compensation order may include provision for—

(a) an independent valuer (in which case sections 54 to 56 are to apply);

(b) valuation principles (in which case section 57(2) to (5) is to apply).

Independent valuer: valuation under section 6E or 48X

62A

(1) The Bank of England must make arrangements for the appointment of a person to act as independent valuer for the purposes of a valuation to be conducted under section 6E or 48X.

(1A) The Bank may require the bank to which the valuation relates to reimburse the Bank for costs it incurs in relation to the independent valuer (including remuneration and allowances paid to the valuer and the valuer's staff).

(2) A person may not be appointed as independent valuer under subsection (1) unless that person—

(a) qualifies as “independent” in accordance with regulatory technical standards ..., or

(b) if no such regulatory technical standards exist, satisfies the independence requirement set out in section 1151 of the Companies Act 2006.

(2A) In subsection (2) “regulatory technical standards” means—

(a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are assimilated law, or

(b) technical standards made under subsection (2B).

(2B) The Bank of England may make technical standards specifying the circumstances in which for the purposes of this section a person is to be considered independent from the Bank of England and the bank to which the valuation relates.

(3) An independent valuer is to hold and vacate office in accordance with the terms of his or her appointment.

(4) An independent valuer may be removed from office only on the grounds of incapacity or serious misconduct.

(5) In the event of the death of an independent valuer, or an independent valuer being removed from office or resigning, a new independent valuer must be appointed by the Bank in accordance with this section.

(6) Section 55(1) to (5) and (7) to (10) ... apply in relation to an independent valuer appointed in accordance with this section as they apply to an independent valuer appointed by virtue of section 54.

Resolution administrator

62B

(1) The Bank of England may appoint an individual or body corporate as a resolution administrator.

(2) The power under subsection (1) may be exercised—

(a) by a separate instrument of appointment under this section, or

(b) by way of provision in a mandatory reduction instrument, a share transfer instrument, a property transfer instrument or a resolution instrument.

(3) In this section and sections 62C to 62E—

“appointment instrument” means an instrument under subsection (2)(a);

“Part 1 instrument” means an instrument of a kind mentioned in subsection (2)(b).

(4) A resolution administrator is appointed—

(a) to hold any securities that may be transferred or issued to that person in the capacity of resolution administrator, and

(b) to perform any other functions that may be conferred under any provision of this Part.

(5) The Bank of England may appoint more than one resolution administrator to perform functions in relation to a bank (but no more than one of them may at any one time be authorised to hold securities as mentioned in subsection (4)(a)).

(6) Securities held by a resolution administrator (in that capacity, and whether as a result of a Part 1 instrument or otherwise) are to be held in accordance with the terms of a Part 1 instrument that transfers those, or other, securities to the resolution administrator.

(7) For example, the following provision may be made by virtue of subsection (6)—

(a) provision that specified rights of a resolution administrator with respect to all or any of the securities are to be exercisable only as directed by the Bank of England;

(b) provision specifying rights or obligations that the resolution administrator is, or is not, to have in relation to some or all of the securities.

(8) A resolution administrator must—

(a) in accordance with the Part 1 instrument or the appointment instrument, take all measures necessary to promote the special resolution objectives, and

(b) have regard, in performing any functions of the office, to any other objectives that may be specified in a Part 1 instrument or the appointment instrument.

(9) Where one or more objectives are specified in accordance with subsection (8), the objectives are to be taken to have equal status with each other, unless the contrary is stated in the Part 1 instrument or the appointment instrument.

(10) The following provisions apply in relation to an appointment instrument as they apply in relation to a resolution instrument—

(a) section 48S(2) and (3) (power to make incidental, consequential provision etc);

(b) section 48T (procedure).

62C

(1) An appointment instrument or a Part 1 instrument may—

(a) authorise a resolution administrator to manage the bank’s business (or confer on a resolution administrator any other power with respect to the management of the bank’s business);

(b) authorise a resolution administrator to exercise any other powers of the bank;

(d) provide that the exercise of any power conferred by the instrument in accordance with this section is to be subject to conditions specified in the instrument.

(2) An appointment instrument or a Part 1 instrument may require a resolution administrator to make reports to the Bank of England—

(a) on any matter specified in the instrument, and

(b) at the times or intervals specified in the instrument.

(3) If an instrument specifies a matter in accordance with subsection (2)(a), it may provide for further requirements as to the contents of the report on that matter to be specified in an agreement between the Bank of England and the resolution administrator.

(4) An appointment instrument or a Part 1 instrument may—

(a) require a resolution administrator to consult specified persons before exercising specified functions (and may specify particular matters on which the specified person must be consulted);

(b) provide that a resolution administrator is not to exercise specified functions without the consent of a specified person.

62D

(1) A resolution administrator may do anything necessary or desirable for the purposes of or in connection with the performance of the functions of the office.

(2) A resolution administrator is not a servant or agent of the Crown (and, in particular, is not a civil servant).

(3) Where a resolution administrator is appointed under this Part, the Bank of England—

(a) must make provision in the appointment instrument or a Part 1 instrument for the resignation and replacement of the resolution administrator;

(b) may remove the resolution administrator from office only (i) on the ground of incapacity or misconduct, or (ii) on the ground that there is no further need for a person to perform the functions conferred on the resolution administrator.

62E

(1) An appointment instrument or a Part 1 instrument may provide for the payment of remuneration and allowances to a resolution administrator.

(2) Provision made under subsection (1) may provide that the amounts are—

(a) to be paid by the Bank of England, or

(b) to be determined by the Bank of England and paid by the bank.

(3) A resolution administrator is not liable for damages in respect of anything done in good faith for the purposes of or in connection with the functions of the office (subject to section 8 of the Human Rights Act 1998).

70A

(1) The Bank of England may suspend obligations to make a payment, or delivery, under a contract where one of the parties to the contract is a bank in respect of which the Bank is exercising a stabilisation power.

(2) A suspension imposed under subsection (1) does not apply to—

(a) payments of eligible deposits or eligible claims, or

(b) payments or deliveries to excluded persons.

(3) A suspension imposed under subsection (1)—

(a) begins when the instrument providing for the suspension is first published,

(b) must end no later than midnight at the end of the first business day following the day on which the instrument providing for the suspension is published, and

(c) subject to subsection (2), suspends all obligations to make a payment or delivery under the contract in question, whether the obligation concerned is that of the bank under resolution or of any other party to the contract.

(4) Where a payment or delivery under the contract concerned first fell due within the period of the suspension, that payment or delivery is treated as being due immediately on the expiry of the suspension.

(5) The power under subsection (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6) The Bank of England must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in subsection (1).

(7) In this section—

“eligible claim” means a claim in respect of which compensation is payable under the Financial Services Compensation Scheme ...

“eligible deposit” means a deposit in respect of which the person, or any of the persons, to whom it is owed would be eligible for compensation under the Financial Services Compensation Scheme ....

70B

(1) Where the Bank of England is exercising a stabilisation power in respect of bank, the Bank may suspend the rights of a secured creditor of the bank to enforce any security interest the creditor has in relation to any assets of the bank.

(2) A suspension under subsection (1)—

(a) begins when the instrument providing for the suspension is first published, and

(b) must end no later than midnight at the end of the first business day following the day on which that instrument is published.

(3) But the Bank of England may not suspend the rights of an excluded person to enforce any security interest that person may have in relation to any asset of the bank under resolution which has been pledged or provided to the excluded person in question as collateral or as cover for margin.

(4) The power under subsection (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(5) Where the power in subsection (1) is being exercised in a partial property transfer, the Bank of England must ensure that any restrictions on the enforcement of security interests which it imposes under that subsection are applied consistently for all banking group companies in respect of which the Bank is exercising a stabilisation power.

(6) The Bank of England must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in subsection (1).

(7) For the purposes of this section, a “security interest” means an interest or right held for the purpose of securing the payment of money or the performance of any other obligation.

70C

(1) The Bank of England may suspend the termination right of any party to a qualifying contract (other than a party who is an excluded person).

(2) A contract is a “qualifying contract” for the purpose of this section if—

(a) one of the parties to the contract is a bank in respect of which the Bank is exercising a stabilisation power (a “bank under resolution”) and all the obligations under the contract to make a payment, make delivery or provide collateral continue to be performed, or

(b) one of the parties to the contract is a subsidiary undertaking of a bank under resolution and the condition in subsection (3) is met.

(3) The condition is that—

(a) the obligations of the subsidiary undertaking are guaranteed or otherwise supported by the bank under resolution,

(b) the termination rights under the contract are triggered by the insolvency or the financial condition of the bank under resolution, and

(i) all the assets and liabilities relating to the contract have been or are being transferred to, or assumed by, a single transferee, or

(ii) the Bank of England is providing adequate protection for the performance of the obligations of the subsidiary undertaking under the contract in any other way.

(4) The Bank of England must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in subsection (1).

(5) The power under subsection (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6) A suspension imposed under subsection (1)—

(a) begins when the instrument providing for the suspension is first published, and

(b) must end no later than midnight at the end of the first business day following the day on which that instrument is published;

....

(7) A person may exercise a termination right under a contract before the expiry of the suspension if that person is given notice by the Bank of England that the rights and liabilities of the bank under resolution covered by the contract are not—

(a) to be transferred to another undertaking through the exercise of a stabilisation power, or

(b) to be made subject to a mandatory reduction instrument or a resolution instrument.

(8) If—

(a) no notice has been given by the Bank of England under subsection (7), and

(b) a termination right has been triggered otherwise than through the exercise of a stabilisation power or the imposition of a suspension under subsection (1) (or the occurrence of an event directly linked to the exercise of a stabilisation power),

a person may, on the expiry of the suspension, exercise the termination right in accordance with the terms of the contract.

(9) But, where the rights and liabilities of the bank under resolution or the subsidiary undertaking under the contract have been transferred to another undertaking, subsection (8) applies only if the event giving rise to the termination right has been triggered by that undertaking.

(10) For the purposes of this section, “termination right” means—

(a) a right to terminate a contract,

(b) a right to accelerate, close out, set-off or net obligations, or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract, or

70D

(1) For the purposes of sections 70A to 70C—

“business day” means any day other than a Saturday, a Sunday, or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom;

“excluded person” means—a person who has been declared to be, or who is an operator of, a designated system under regulation 4 of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999,...a recognised central counterparty ... or third country central counterparty, ora central bank.

(2) For the purposes of subsection (1) ..., “recognised central counterparty” and “third country central counterparty” have the meaning given in section 285 of the Financial Services and Markets Act 2000.

78A

(1) The Treasury may at any time require the Bank of England to inform them in writing whether or not a condition for financial assistance has been met in relation to a particular bank.

(2) “Condition for financial assistance” means a condition specified in—

(a) Article 37(10)(a) (financial assistance through government stabilisation tools), or

(b) Article 44(5)(a) (contributions to institution from resolution financing arrangement where bail-in liabilities have been excluded from bail-in),

of the recovery and resolution directive.

(3) If the Bank of England seeks the Treasury’s consent to the making of a mandatory reduction instrument or the exercise of a stabilisation power in accordance with section 78, the Bank must notify the Treasury in writing—

(a) whether or not the proposals involve action in relation to which a condition for financial assistance applies, and

(b) if the proposals do involve such action, whether or not the condition in question has been met.

(4) This section does not apply where the Bank of England has required, or decided to require, a recapitalisation payment under section 214E of the Financial Services and Markets Act 2000.

79A

(1) This section applies where the Bank of England sells all or part of a bank's business to a commercial purchaser.

(2) The Bank must report to the Chancellor of the Exchequer about the exercise of the power to make share transfer instruments and property transfer instruments under section 11(2).

(3) The report must comply with any requirements as to content specified by the Treasury.

(4) The report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer instrument made under section 11(2).

80A

(1) This section applies where the Bank of England makes one or more resolution instruments under section 12A(2) in respect of a bank.

(2) The Bank of England must, on request by the Treasury, report to the Chancellor of the Exchequer about—

(a) the exercise of the power to make a resolution instrument under section 12A(2),

(b) the activities of the bank, and

(3) In relation to the matters in subsection (2)(a) and (b), the report must comply with any requirements that the Treasury may specify.

(4) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.

81A

(1) A report under section 80(1), 80A(2)(b) or 81 must include accounting information in respect of the bank or resolution company that is the subject of the report.

(2) In this section “accounting information” means—

(a) a balance sheet that, in the opinion of the person making the report, gives a true and fair view of the state of affairs of the bank or resolution company as at the reporting date, and

(b) a profit and loss account that, in the opinion of the person making the report, gives a true and fair view of the profit or loss of the bank or resolution company for the reporting period.

(3) In this section—

(a) “reporting period” means the period to which the report relates, and

(b) “reporting date” means the last day of the reporting period.

81AA

(1) Section 6B (mandatory write-down, conversion, etc. of capital instruments and relevant internal liabilities) applies in relation to a banking group company in the cases set out in subsections (2), (4) , (8) and (8A).

(2) Case 1 is where—

(a) the conditions imposed by section 81B or 81ZBA on the exercise of a stabilisation power in accordance with section 11(2), 12(2) or 12ZA(3) are met in respect of the banking group company,

(b) the Bank of England has decided to exercise the stabilisation power,

(i) is a financial institution which is a subsidiary of an institution (within the meaning of Article 4.1A of the capital requirements regulation) (“the parent institution”), but

(ii) is not an entity within subsection (2A),

the requirements of subsection (3) are met, and

(d) section 12AA (mandatory write-down etc in bail-in cases) does not apply in relation to the banking group company by virtue of the exercise of a power under section 81BA (bail-in: banking group company).

(2A) The entities covered by subsection (2)(c)(ii) are—

(a) an entity of any of the following kinds which is established in the United Kingdom—

(i) a financial holding company;

(ii) a mixed financial holding company;

(iii) a mixed-activity holding company;

(b) a UK parent financial holding company or a UK parent mixed financial holding company,

and expressions used in this subsection have the same meaning as in the capital requirements regulation.

(3) For the purposes of subsection (2)(c)—

(a) the first requirement is that—

(i) the appropriate authority is satisfied that Condition 1 in section 7 is met in relation to the banking group company, and

(ii) the Bank of England is satisfied that Conditions 2, 3 and 4 of that section are met in relation to that company;

(b) the second requirement is that—

(i) where the parent institution is a bank, the PRA is satisfied that Condition 1 in section 7 is met, and the Bank of England is satisfied that Conditions 2, 3 and 4 in that section are met in relation to the parent institution,

(ii) ... and

(iii) where the parent institution is a third-country institution, subsection (7) applies in relation to the banking group company by reason of that third country institution.

(4) Case 2 is where—

(a) the appropriate authority is satisfied that Condition 1 in section 7 is met in respect of the banking group company,

(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 banking group company, and

(5) This subsection applies in relation to the banking group company if—

(a) the PRA is satisfied that Condition 1 in section 7 is met in respect of a bank to which section 81D(1)(a) applies, and

(b) the Bank of England is satisfied that (ignoring section 6B) Condition 2 in section 7 is met in relation to that bank.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) This subsection applies in relation to the banking group company if the relevant third-country authority has determined that any conditions required by the law of the third country to be met before—

(a) any power for the relevant third country authority to write down or convert capital instruments or relevant internal liabilities provided for under the law of that third country may be exercised, or

(b) third-country resolution action may be taken,

are met in relation to a third-country institution to which section 81D(1)(a) applies.

(8) Case 3 is where—

(a) extraordinary public financial support is required by the banking group company 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 ... that, in order for a bank ... which is a member of the same group as the banking group company to fulfil its own funds requirements, relevant capital instruments or relevant internal liabilities of the banking group company need to be written down or converted into Common Equity Tier 1 instruments (or both).

(8A) Case 4 is where—

(a) the banking group company is (or, but for the exercise of a stabilisation power, would be) a parent undertaking of a bank from which it has purchased (directly or indirectly) relevant capital instruments or relevant internal liabilities,

(b) the banking group company is not a resolution entity,

(c) the relevant capital instruments or relevant internal liabilities of the banking group company have been purchased (directly or indirectly) by a resolution entity in the same resolution group as the banking group company,

(d) any of the cases provided for in section 6A applies to the bank referred to in paragraph (a) above, and

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