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Application provision

1.1 Unless otherwise stated, this Part applies to a BRRD undertaking which is:

2.1

01/08/2016

Except in the circumstances described in 2.1A a BRRD undertaking must include in the contract governing a liability a term by which the creditor or party to the agreement creating the liability recognises that the liability may be subject to the exercise of a power by the Bank of England to make special bail-in provision or mandatory reduction provision and agrees to be bound by any reduction of the principal or outstanding amount due or by any conversion or cancellation effected by the exercise of that power, provided that such liability is:

  1. (1) not an excluded liability;
  2. (2) not an excluded deposit;
  3. (3) governed by the law of a third country; and
  4. (4) a liability of a type described in 2.3.

Additional Notes


[Note: Art. 55(1) (part) of the BRRD]

2.1A

31/12/2020

The changes to this rule are effective from 23:00 on 31/12/2020.

The inclusion of a contractual term in a contract is not required by this Part in respect of any phase two liability where it would be impracticable for the BRRD undertaking to include it in respect of that phase two liability.

2.1B

31/12/2020

This rule is effective from 23:00 on 31/12/2020.

Subject to 2.1C, the requirement in 2.1 shall not apply where the contract: 

  1. (1) was made before IP completion day; and
  2. (2) is governed by the law of an EEA State.

2.1C

31/12/2020

This rule is effective from 23:00 on 31/12/2020.

Notwithstanding 2.1B, the requirement in 2.1 shall apply to a contract referred to in 2.1B from the time of any material amendment to the contract made on or after IP completion day.

2.2

31/12/2020

The changes to this rule are effective from 23:00 on 31/12/2020.

In respect of a liability to which 2.1 applies that is:

  1. (1) an additional tier 1 instrument; or
  2. (2) a tier 2 instrument,

a BRRD undertaking that is a CRR firm must provide to the PRA a properly reasoned independent legal opinion from an individual appropriately qualified in the relevant third country on the enforceability and effectiveness of the term required by this Part.

2.3

01/08/2016

A liability in 2.1(4) is:

  1. (1) a liability (other than a liability under a debt instrument) created after 31 December 2015, regardless of whether it is created under an agreement entered into on or before 31 December 2015 (including under a master or framework agreement between the contracting parties governing multiple liabilities);
  2. (2) a liability (other than a liability under a debt instrument) created on or before 31 December 2015 if the agreement governing the liability is subject to a material amendment after 31 July 2016;
  3. (3) a liability under a debt instrument issued on or after 19 February 2015;
  4. (4) a liability under a debt instrument issued before 19 February 2015 which is subject to a material amendment after 31 July 2016.