IFPRU 11.6 1Contractual recognition of bail-in

This section applies to:

1. (1)

   an IFPRU 730k firm that is not subject to supervision on a consolidated basis;

2. (2)

   a firm that is an RRD group member;

3. (3)

   a qualifying parent undertaking that is an RRD group member; and

4. (4)

   a qualifying parent undertaking that is:

   1. (a)

      a mixed activity holding company of an IFPRU 730k firm; and

   2. (b)

      does not hold an RRD institution using an intermediate financial holding company or mixed financial holding company.

1. (1)

   If a liability meets the conditions in (2), a firm or qualifying parent undertaking must include a term in the contract governing the liability which states that the creditor or party to the agreement creating the liability:

   1. (a)

      recognises that the liability may be subject to write-down and conversion powers; and

   2. (b)

      agrees to be bound by any of the following actions of the Bank of England3 in relation to that liability:

      1. (i)

         reduction of principal or outstanding amount due; or

      2. (ii)

         conversion; or

      3. (iii)

         cancellation.

2. (2)

   The contractual recognition of a bail-in requirement in (1) applies to a liability that is:

   1. (a)

      governed by the law of a third country that is not an EEA State3;

   2. (b)

      issued or entered into after 1 January 2016;

   3. (ba)

      2issued or entered into before 1 January 2016 but materially amended after 9 December 2016;

   4. (c)

      of a type that is not excluded under article 44(2) of RRD;

   5. (d)

      not a deposit of a type referred to in point (a) of article 108 of RRD; and

   6. (e)

      not a liability which the Bank of England3 has determined can be subject to write-down and conversion powers by the Bank of England3 under:

      1. (i)

         the law of a third country; or

      2. (ii)

         a binding agreement concluded with that third country.

3. (3)

   3The contractual recognition of bail-in requirement in (1) also applies to a liability that is:

   1. (a)

      governed by the law of an EEA State;

   2. (b)

      issued or entered into after IP completion day4;

   3. (c)

      issued or entered into before IP completion day4 but materially amended after IP completion day4;

   4. (d)

      of a type that is not excluded under article 44(2) of RRD;

   5. (e)

      not a deposit of a type referred to in point (a) of article 108 of RRD; and

   6. (f)

      not a liability which the Bank of England has determined can be subject to write-down and conversion powers by the Bank of England under:

      1. (i)

         the law of an EEA State; or

      2. (ii)

         a binding agreement concluded with that EEA State.

[Note: article 55(1) of RRD]