Prudential Regulation Authority Rulebook

3.1

This Chapter applies to a BRRD undertaking which is:

1. (1) an EEA parent undertaking unless the FCA is the EEA consolidating supervisor of its group; or
2. (2) a firm controlled by an EEA parent financial holding company or an EEA parent mixed financial holding company if:
1. (a) the EEA parent financial holding company or EEA parent mixed financial holding company is not incorporated in the UK and does not have a place of business in the UK; and
2. (b) the PRA is the EEA consolidating supervisor of the firm.

3.2

If the EEA consolidating supervisor is the PRA, a BRRD undertaking must draw up a group recovery plan and submit the group recovery plan to the PRA. If the EEA consolidating supervisor is not the PRA, a BRRD undertaking that is a qualifying parent undertaking must make arrangements to ensure that a group recovery plan is drawn up and submitted to the EEA consolidating supervisor.

[Note: Art. 7(1) of the BRRD]

3.3

The group recovery plan must consist of a recovery plan for the group headed by the EEA parent undertaking as a whole.

[Note: Art. 7(1) of the BRRD]

3.4

A BRRD undertaking which is required by 3.2 to submit the group recovery plan to the PRA must provide its recovery plan to the PRA by online submission through:

1. (1) email; or
2. (2) the appropriate systems made available to BRRD undertakings.

3.5

The group recovery plan must identify measures that may be required to be implemented at the level of the EEA parent undertaking and each individual subsidiary.

[Note: Art. 7(1) of the BRRD]

3.6

The group recovery plan must aim to achieve the stabilisation of the group as a whole, or any institution of the group, when it is in a situation of stress so as to address or remove the causes of the distress and restore the financial position of the group or the institution in question, at the same time taking into account the financial position of other group entities.

[Note: Art. 7(4) of the BRRD]

3.7

The group recovery plan must include arrangements to ensure the coordination and consistency of measures to be taken at the level of the EEA parent undertaking, at the level of an Article 1(1)(c) entity or Article 1(1)(d) entity, as well as measures to be taken at the level of a subsidiary and, where applicable, in accordance with the CRD at the level of a significant branch.

[Note: Art. 7(4) of the BRRD]

3.8

The group recovery plan must include the elements specified in 2.6 – 2.9. The group recovery plan must include, where applicable, arrangements for intra-group financial support adopted pursuant to an agreement for intra-group financial support that has been concluded in accordance with Articles 19 – 26 of the BRRD or Group Financial Support 2 – 8.

[Note: Art. 7(5) of the BRRD]

3.9

The group recovery plan must include a range of recovery options setting out actions to address a range of scenarios of severe macroeconomic and financial stress relevant to the group’s specific conditions including system-wide events and stress specific to individual legal persons and to groups.

[Note: Art. 7(6) of the BRRD]

3.10

For each scenario, the group recovery plan must identify whether there are obstacles to the implementation of recovery measures within the group, including at the level of individual entities covered by the plan, and whether there are substantial practical or legal impediments to the prompt transfer of own funds or the repayment of liabilities or assets within the group.

[Note: Art. 7(6) of the BRRD]

3.11

A BRRD undertaking that is a firm must demonstrate to the PRA that the group recovery plan meets the requirements set out in this Chapter and the following criteria:

1. (1) the implementation of the arrangements proposed in the group recovery plan is reasonably likely to maintain or restore the viability and financial position of the group or of an individual subsidiary in the group, taking into account the preparatory measures that the individual subsidiary has taken or has planned to take; and
2. (2) the group recovery plan and specific options within the group recovery plan are reasonably likely to be implemented quickly and effectively in situations of financial stress and avoiding to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other institutions to implement group recovery plans within the same period.

[Note: Art. 6(1) of the BRRD]

3.12

A BRRD undertaking that is a qualifying parent undertaking must make arrangements to ensure it is demonstrated to the EEA consolidating supervisor that the group recovery plan meets the requirements set out in this Chapter and the following criteria:

1. (1) the implementation of the arrangements proposed in the group recovery plan is reasonably likely to maintain or restore the viability and financial position of the group or of an individual subsidiary in the group, taking into account the preparatory measures that the individual subsidiary has taken or has planned to take; and
2. (2) the group recovery plan and specific options within the group recovery plan are reasonably likely to be implemented quickly and effectively in situations of financial stress and avoiding to the maximum extent possible any significant adverse effect on the financial system, including in scenarios which would lead other institutions to implement group recovery plans within the same period.

[Note: Art. 6(1) of the BRRD]