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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

01/08/2016

2.1 does not apply in respect of a phase two liability where it would be impracticable for the BRRD undertaking to comply with 2.1 in respect of that phase two liability.

2.2

01/01/2016

In respect of a liability 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 referred to in 2.1.

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.