Article 55 of the Bank Recovery and Resolution Directive (BRRD) requires firms to include in certain non-EU law contracts governing liabilities a term by which the relevant creditor or party to the contract recognises that the liability may be bailed in by the Bank of England as resolution authority.
The PRA has now published:
- Policy Statement 17/16: The contractual recognition of bail-in: amendments to the PRA rules (PS17/16); and
- Supervisory Statement 7/16: The contractual recognition of bail-in: impracticability (SS17/16)
In PS17/16 the PRA provides feedback on the responses to its earlier consultation (Consultation Paper 8/16: The contractual recognition of bail-in: amendments to PRA rules). It sets out the final rules that, together with SS17/16, implement Article 55 of the BRRD. The rules come into force on 1 August 2016.
In PS17/16 the PRA notes that overall the responses to its earlier consultation do not require significant changes to its proposals. However the PRA has amended the definitions of “unsecured liability”, “material amendment” and “excluded liability” in order to add further clarity and ensure consistency with the BRRD related regulatory technical standards on contractual recognition that the European Commission adopted in March 2016. The PRA has also amended the rules to reflect the fact that the amendments will come into force on 1 August 2016, rather than 1 July, as anticipated in its earlier consultation. The PRA has not made any further changes beyond these amendments. The PRA has not made any changes to SS17/16 as consulted on.