Prudential Regulation Authority Rulebook

2.1

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) issued, entered into or arising after 31 December 2015.

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

2.2

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.