Prudential Regulation Authority Rulebook

2.1

A BRRD undertaking must not enter into a group financial support agreement unless the following conditions are satisfied:

1. (1) the group financial support agreement specifies the principles for the calculation of the consideration for any transaction made under it, which:
1. (a) need not take into account any anticipated temporary impact on market prices arising from events external to the group;
2. (b) may take into account information unavailable to the market in the possession of the party providing financial support based on it being in the same group as the party receiving financial support; and
3. (c) must require that the consideration is set at the time of the provision of financial support;
2. (2) each party acts freely in entering into the group financial support agreement;
3. (3) in entering into the group financial support agreement and in determining the consideration for the provision of financial support, each party acts in its own best interests which may take account of any direct or any indirect benefit that may accrue to a party as a result of the provision of the financial support;
4. (4) each party providing financial support has full disclosure of relevant information from any party receiving financial support prior to determination of the consideration for the provision of financial support and prior to any decision to provide financial support;
   [Note: Art. 19(7) of the BRRD]
   
5. (5) any right, claim or action arising from the group financial support agreement may be exercised only by the parties to the agreement; and
   [Note: Art. 19(9) of the BRRD]
   
6. (6) the terms of the group financial support agreement are consistent with the conditions for the provision of financial support in 4.1.
   [Note: Art. 20(3) of the BRRD]

2.2

A BRRD undertaking must not enter into a proposed group financial support agreement if:

1. (1) the consolidating supervisor has not granted permission to do so; or
2. (2) at the time the proposed agreement is made, the competent authority has decided that a party to the agreement that is an institution meets the conditions for early intervention.

[Note: Art. 19(8) and Art. 20(3) of the BRRD]