Recovery and Resolution

1.1

Unless otherwise stated, this Part applies to:

1. (1) a UK Bank;
2. (2) a building society; and
3. (3) a UK designated investment firm.

1.2

In this Part, the following definitions shall apply:

group

means A and any person who is:

1. (a) a parent undertaking of A;
2. (b) a subsidiary undertaking of A;
3. (c) a subsidiary undertaking of a parent undertaking of A;
4. (d) a parent undertaking of a subsidiary undertaking of A;
5. (e) if A or an undertaking in (a) or (d) is an incorporated friendly society, a body corporate of which that friendly society has joint control (as defined in section 13(9)(c) or (cc) of the Friendly Societies Act 1992);

recovery plan

means a document containing information which:

1. (1) relates to action to be taken to secure that, in the event of specified circumstances affecting the carrying on of business (or any part of the business) of a firm:
1. (i) the business of the firm; or
2. (ii) a specified part of that business;
2. is capable of being carried on (whether or not by the firm and whether or not in the same way as previously);
3. (2) would facilitate the carrying on of the business (or any part of the business) of a firm by any other person.
4. [Note: This definition is based on the definition for ‘recovery plan’ in section 137J of the Act.]

resolution pack

means a document containing information which:

1. (a) relates to action to be taken in the event of:
1. (i) circumstances arising in which it is likely that the business (or any part of the business) of a firm will fail; or
2. (ii) the failure of the business (or any part of the business) of a firm;
2. (b) would facilitate anything falling to be done by any person in consequence of that failure. An example of information within (b) is information that, in the event of that failure, would facilitate:
1. (i) planning by the Treasury in relation to the possible exercise of any of its powers under Part 1 of the Banking Act 2009; or
2. (ii) planning by the Bank of England in relation to the possible exercise of any of its powers under Part 1, 2 or 3 of that Act.
3. [Note: This definition is based on the definition for ‘resolution plan’ in section 137K of the Act.]

senior personnel

those persons who effectively direct the business of the firm, which could include a firm's governing body and other persons who effectively direct the business of the firm.

1.3

In this Part:

1. (1) references to the taking of action include the taking of action by:
1. (a) the firm;
2. (b) any other person in the same group as the firm; and
3. (c) a partnership of which the firm is a member;
2. (2) references to the business of the firm include references to the business of:
1. (a) any other person in the same group as the firm; and
2. (b) a partnership of which the firm is a member.

2.1

1. (1) Subject to (2), every firm must prepare and maintain an adequate recovery plan.
2. (2) If a group has within it more than one firm to which this Part applies, only one of those firms needs to have a recovery plan, so long as that plan contains content for each firm in the group that complies with 2.3, 2.4, 2.5 and 2.6.

2.2

A firm must provide its recovery plan to the PRA by online submission through:

1. (1) email; or
2. (2) the appropriate systems made available to firms.

2.3

The recovery plan must set out the actions that could be taken to secure that:

1. (1) the business of the firm; or
2. (2) any part of the business of the firm,

is capable of being carried on and returned to a stable and sustainable condition (whether or not by the firm and whether or not in the same way as previously) if circumstances arise which adversely affect the carrying on of the business (or any part of the business) of the firm.

2.4

The recovery plan must contain a comprehensive range of options setting out actions that could be taken in a number of different scenarios and stresses, whether by:

1. (1) the firm alone; or
2. (2) the firm in conjunction with other members of its group; or
3. (3) by another member of the group.

2.5

The recovery plan must, in particular, include:

1. (1) the actions that could be taken to return the firm to adequate levels of capital and liquidity; and
2. (2) the applicable governance arrangements, and indicators when options in the recovery plan might be employed, and procedures to ensure the timely implementation of the actions.

2.6

A firm must notify the PRA as soon as it becomes aware that the firm’s recovery plan indicators have been met.

2.7

A firm’s recovery plan must take into account the wider business of the group of which the firm is a member.

[Note: Art 74(4) of the CRD]

3.1

Every firm must prepare and maintain a resolution pack.

3.2

A firm must provide its resolution pack to the PRA by online submission through:

1. (1) email; or
2. (2) the appropriate systems made available to firms.

3.3

1. (1) A resolution pack must contain information and analysis which would facilitate the taking of actions in the event that it is likely that the firm will fail, or in the event that the firm fails.
2. (2) The resolution pack must, in particular, contain sufficient information and analysis to facilitate planning by the Treasury, the Bank of England or the PRA in relation to the possible exercise of any of their powers under the Banking Act 2009.

3.4

A firm’s resolution pack must take into account the wider business of the group of which the firm is a member.

[Note: Art 74(4) of the CRD]

4.1

1. (1) Every firm must review its recovery plan at least once a year.
2. (2) Every firm must keep its recovery plan and its resolution pack up to date, which includes ensuring that each is updated to reflect any material developments in the firm’s business and in the business of any member of the group.

4.2

A firm must notify the PRA of any material changes made to its recovery plan and resolution pack promptly and, in any event, within one month of making any such change.

5.1

A firm must, taking into account the nature, scale and complexity of its business and the business of other members of its group, establish and maintain appropriate internal processes regarding the governance of its recovery plan and resolution pack.

5.2

1. (1) A firm’s recovery plan must be subject to oversight and approval by the firm’s governing body.
2. (2) A firm’s governing body must be responsible for assessing, approving and overseeing the firm’s arrangements in place to produce the firm’s resolution pack. The firm’s audit committee must periodically review these arrangements and the recovery plan.
3. (3) A firm must nominate an executive director who is a member of the firm’s governing body to have responsibility for the recovery plan and resolution pack and for overseeing the internal processes regarding their governance.