Treasury is consulting on the UK implementation of BRRD2. The implementation date is 28 December 2020, so before the end of the Transitional Period. Treasury proposes to implement all those parts of the Directive that will take effect before the end of 2020, but not those parts that will not be effective until later – in particular the revised framework for MREL requirements. Treasury comments that, in any event, the UK already has in place a MREL framework in line with international standards.
The Government will build on the UK’s existing bank resolution regime, and is consulting on those provisions of the Directive that relate to:
- “resolution entities” and “resolution groups”;
- the power of the resolution authority to prohibit certain distributions;
- the power of the resolution authority to suspend any contractual payment or delivery obligations if a firm is failing or likely to fail, but before resolution;
- restrictions on selling subordinated eligible liabilities to retail clients;
- changes to requirements on the contractual recognition of bail-in where it would be impractical to include a contractual term; and
- requirements to recognise the powers of the resolution authority in contracts governed by third country law.
Consultation closes on 11 August.