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2024 | OriginalPaper | Buchkapitel

14. Cross-Border Recognition of Foreign Resolution Actions: The Statutory Regime in the United Kingdom

verfasst von : Shalina Daved, Clare Merrifield, Michael Salib

Erschienen in: Commercial Banking in Transition

Verlag: Springer International Publishing

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Abstract

When a bank fails, the relevant authorities may have to place the firm into a resolution procedure to ensure it fails in an orderly way. Given the cross-border nature of banking operations, it may be necessary for the authority to obtain “recognition” of its actions by authorities in other jurisdictions. This chapter provides an in-depth overview of the UK’s statutory recognition regime of foreign resolution actions: why it is important; when recognition will be granted or refused; and the formalities and practicalities of the recognition process.

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Vorheriges Kapitel Rethinking Crypto-Regulation for Crypto-Investors in the UK

Nächstes Kapitel The Impact of Climate Change on the Economy and Financial System: Legal Aspects of the Bank of England’s Response

Mervyn King, Governor of the Bank of England, ‘Banking—From Bagehot to Basel, and Back Again’ (Second Bagehot Lecture, Buttonwood Gathering, New York, 25 October 2010), https://www.bankofengland.co.uk/-/media/boe/files/speech/2010/banking-from-bagehot-to-basel-and-back-again-speech-by-mervyn-king.

The home authority being the resolution authority that co-ordinates the resolution of a cross-border group, usually in the jurisdiction in which the bank is headquartered; and the host authority being a resolution authority in a jurisdiction in which the bank provides services through one or more subsidiaries or branches.

Sir Jon Cunliffe, Deputy Governor Financial Stability, ‘Ten years on: Lessons from Northern Rock’ (Single Resolution Board Conference, Brussels, 29 September 2017), https://www.bankofengland.co.uk/-/media/boe/files/speech/2017/ten-years-on-lessons-from-northern-rock.pdf.

Sir Dave Ramsden, Deputy Governor for Markets and Banking, ‘The UK’s progress on resolvability’ (Institute of Chartered Accountants in England and Wales (ICAEW), 26 February 2021), https://www.bankofengland.co.uk/speech/2021/february/dave-ramsden-institute-of-chartered-accountants-in-england-wales.

‘The Run on the Rock’, House of Commons Treasury Committee, Fifth Report of Session 2007–2008, Volume II, 24 January 2008, https://publications.parliament.uk/pa/cm200708/cmselect/cmtreasy/56/5602.htm.

The Cross-Border Insolvency Regulations 2006 do not apply to non-UK headquartered entities that have permission to accept deposits or issue electronic money under the Financial Services and Markets Act 2000 (FSMA).

Cross-Border Insolvency Regulations 2006, Article 2(1) of Schedule 1.

Section 426 of the Insolvency Act 1986 might perform a similar function for insolvencies in certain jurisdictions, as might common-law principles of comity.

National Bank of Greece and Athens SA v Metliss [1958] AC 509.

Antony Gibbs and sons v La Société Industrielle et Commerciale des Métaux (1890) 25 QBD 399.

Revised in 2014, https://www.fsb.org/wp-content/uploads/r_141015.pdf.

FSB, ‘Progress and Next Steps Towards Ending “Too-Big-To-Fail” (TBTF)’ (2 September 2013), pages 12 and 13, https://www.fsb.org/wp-content/uploads/r_130902.pdf.

See, for example, the ‘Contractual Recognition’ section in the FSB’s ‘Principles for Cross-border Effectiveness of Resolution Actions’ (3 November 2015), https://www.fsb.org/wp-content/uploads/Principles-for-Cross-border-Effectiveness-of-Resolution-Actions.pdf.

Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC and Directive 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2011/35/EU, 2012/36/EU and Regulations (EU) No 1093/2010 and (EU) No 648/2012 of the European Parliament and of the Council.

Following the UK’s withdrawal from the EU, the UK and EU no longer automatically recognise each other’s resolution actions; rather they would consider any recognition request from one another under their respective third-country recognition regimes (in the same way as the would consider a request from, say, the authorities in the United States).

In this chapter the term “third-country” is used interchangeably with “foreign”.

See Financial Services and Markets Act 2023, Part 7 (third-country resolution actions) of Schedule 11, https://www.legislation.gov.uk/ukpga/2023/29/contentshttps://bills.parliament.uk/bills/3326.

For example, see Economic Secretary to the Treasury’s written statement to the House of Commons on 19 May 2021: “Decisions over whether to recognise a third-country resolution action are regarded by the Financial Stability Board as a key aspect of an effective cross-border resolution regime”, https://www.theyworkforyou.com/wms/?id=2021-05-19.hcws39.h. Further, the Treasury Code of Practice, which the Bank must have regard to under s.5 of the Act, includes paragraph 10.2 on effective cross-border resolution, see ‘Banking Act 2009: special resolution regime code of practice (December 2020), https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/945165/SRR_CoP_December_2020.pdf.

Under s 89H(7) of the Act, a “third-country institution” means an institution established in a country or territory other than the UK that would, if it were established within the UK, be regarded as a bank, building society, credit union or investment firm.

Equivalence is an autonomous mechanism by which one jurisdiction can recognise relevant standards in another jurisdiction as equivalent to their own (e.g. to allow for market access or preferential treatment for firms). Although the difference between “broad comparability” and “equivalence” may be less given the UK’s stated preference is for “outcomes-based” equivalence (in contrast to the “line-by-line” comparisons of laws which have characterised the EU approach), see HM Treasury ‘Guidance Document for the UK’s Equivalence Framework for Financial Services’ (November 2020), https://www.gov.uk/government/publications/guidance-document-for-the-uks-equivalence-framework-for-financial-services.

The Act, s 4.

The Act, s 4(10).

See ‘Recognition of third-country resolution action’ on the Bank of England’s ‘Resolution’ page, https://www.bankofengland.co.uk/financial-stability/resolution.

The Bank of England Act 1998, s 2A.

See in particular Supervisory Statement | SS5/21 ‘International banks: The PRA’s approach to branch and subsidiary supervision’ (July 2021), https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2021/ss521-july-2021.pdf?la=en&hash=D45354116A8BB3F7DC567815C61878203300A2B1.

The Act, s 89JA. See also HM Treasury’s ‘special resolution regime code of practice’ (December 2020), paragraphs 10.12–10.17, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/945165/SRR_CoP_December_2020.pdf.

The Act, s 78.

See, for example, SRM Global Master Fund LP & Ors v HM Treasury [2009] EWHC 227 (Admin).

The Act, s 89I(3).

The Act, s 89I(7).

The Act, s 89I(9).

This safeguard is intended to ensure that shareholders and creditors of a banking institution are left in no worse position as a result of the exercise of the stabilisation powers than they would have been in had the powers not been exercised and the bank gone into insolvency.

The Act, s 89I(8).

See ‘Recognition of third-country resolution actions’ section of the Bank of England’s ‘Resolution’ page https://www.bankofengland.co.uk/financial-stability/resolution.

The Act, s 89H(2).

The Act, s 89I(2).

The Act, s 48Z.

Within the meaning of FSMA, s 103(1).

E.g. R v Secretary of State for the Home Department, ex p. Doody [1994] 1 A.C. 531, 564E–F.

The Act, s 89L applying FSMA, s 348.

R (Rights: Community: Action) v Secretary of State for Housing Communities and Local Government [2021] PTSR 553 at [6].

The Bank has statutory immunity from liability in damages in respect of its action or inaction in its capacity, inter alia, as a resolution authority; the immunity does not extend to action or inaction (a) in bad faith; or (b) in contravention of section 6(1) of the Human Rights Act 1998 (public authority not to act contrary to the ECHR), see s 244 of the Act.

E.g. R v Secretary of State for the Home Department, ex p. Doody [1994] 1 A.C. 531, 564E–F.

The Act, s 89L applying FSMA, s 348.

See text box, ‘Case Study: Recognition of the The PrivatBank Bail-in’.

IMF, UK FSAP, ‘Recommendations on Financial Safety Net and Financial Crisis

Preparedness’ (March 2022), paragraph 39, https://www.imf.org/en/Publications/CR/Issues/2022/04/07/United-Kingdom-Financial-Sector-Assessment-Program-Select-Issues-in-Financial-Safety-Net-516276.

See the ‘Recognition of third-country resolution actions’ section on the Bank of England’s ‘Resolution’ page, https://www.bankofengland.co.uk/financial-stability/resolution.

Sir Jon Cunliffe, Deputy Governor Financial Stability, ‘Central Clearing and Resolution—Learning some of the lessons’ (FIA International Derivatives Expo 2018, London, 5 June 2018), https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/central-clearing-and-resolution-learning-some-of-the-lessons-of-lehmans-speech-by-jon-cunliffe.pdf.

Titel: Cross-Border Recognition of Foreign Resolution Actions: The Statutory Regime in the United Kingdom
verfasst von: Shalina Daved
Clare Merrifield
Michael Salib
Verlag: Springer International Publishing
Buch: Commercial Banking in Transition
Print ISBN: 978-3-031-45288-8

Electronic ISBN: 978-3-031-45289-5

Copyright-Jahr: 2024
DOI: https://doi.org/10.1007/978-3-031-45289-5_14