The Bank of England (BoE) has published a consultation paper setting out its proposed policy for exercising its power to direct institutions to address impediments to resolvability under section 3A of the Banking Act 2009 (the Banking Act) as amended following the transposition of the Bank Recovery and Resolution Directive. The consultation paper describes the context of this new power and consults on a proposed Statement of Policy regarding its use as required by section 3B(9) of the Banking Act.
The BoE’s power of direction applies to:
- banks, building societies and certain investment firms (institutions) that are authorised by the PRA or FCA;
- parent companies of such institutions that are financial holding companies or mixed financial holding companies; and
- PRA or FCA authorised financial institutions that are subsidiaries of such institutions or such parent companies.
Under section 3A(4) of the Banking Act, the BoE also has a power to direct those institutions to maintain a minimum requirement for own funds and eligible liabilities. The BoE will be issuing a separate Statement of Policy later this year regarding this.
The deadline for comments on the consultation paper is 22 August 2015.