IFPRU 11.3 Group recovery plans

Application

IFPRU 11.3.1 R

This section applies to:

  1. (1)

    a firm that is the EEA parent undertaking of an RRD group;

  2. (2)

    a qualifying parent undertaking that is the EEA parent undertaking of an RRD group; and

  3. (3)

    an IFPRU 730k firm that is the subsidiary of the EEA parent undertaking of an RRD group where:

    1. (a)

      the EEA parent undertaking is an EEA parent financial holding company or an EEA parent mixed financial holding company that is incorporated in, or formed under, the law of an EEA state other than the United Kingdom; and

    2. (b)

      the IFPRU 730k firm has the FCA as its consolidating supervisor.

IFPRU 11.3.2 G

This section applies differently depending on whether the group includes a significant IFPRU firm or a non-significant IFPRU firm, as explained in the table below.

Provisions of IFPRU 11.3

Who it applies to

IFPRU 11.3.4 R to IFPRU 11.3.7 R

All groups.

IFPRU 11.3.8 R

Groups that include an IFPRU 730k firm that is a significant IFPRU firm and groups that do not include an IFPRU 730k firm only.

IFPRU 11.3.9 R to IFPRU 11.3.10 G

Non-significant IFPRU firmgroups only.

IFPRU 11.3.11 G to IFPRU 11.3.19 R

All groups.

IFPRU 11.3.20R (1)(a)

Groups that include an IFPRU 730k firm that is a significant IFPRU firm and groups that do not include an IFPRU 730k firm only.

IFPRU 11.3.20R (1)(b)

Non-significant IFPRU firmgroups only.

IFPRU 11.3.20R (2)

All groups.

IFPRU 11.3.21 R

All groups.

IFPRU 11.3.3 G

IFPRU 1.2 (Significant IFPRU firm) explains the definition of a significant IFPRU firm.

Requirement to draw up and maintain a group recovery plan

IFPRU 11.3.4 R

A firm or qualifying parent undertaking must draw up and maintain a group recovery plan.

[Note: article 7(1) of RRD]

General requirements of the group recovery plan

IFPRU 11.3.5 R

The group recovery plan must:

  1. (1)

    consist of a plan for the recovery of the RRD group as a whole; and

  2. (2)

    identify measures the group may need to implement at the level of:

    1. (a)

      the EEA parent undertaking; and

    2. (b)

      each individual subsidiary.

[Note: article 7(1) of RRD]

IFPRU 11.3.6 R

The group recovery plan must include arrangements to ensure the coordination and consistency of measures for each RRD group member, including, where applicable, each significant branch.

[Note: article 7(4) of RRD]

IFPRU 11.3.7 R

The group recovery plan must:

  1. (1)

    aim to stabilise the RRD group as a whole and each RRD institution in the group, when the group, or any RRD institution in the group, is under financial stress;

  2. (2)

    aim to address or remove the causes of the financial stress and restore the financial position of the group or the RRD institution in question; and

  3. (3)

    at the same time consider the financial position of other group members.

[Note: article 7(4) of RRD]

Group recovery plan for a group that includes an IFPRU 730k firm that is a significant IFPRU firm or does not include an IFPRU 730k firm

IFPRU 11.3.8 R

The group recovery plan must include the information in IFPRU 11 Annex 1R (Recovery plans for significant IFPRU firms and group recovery plans for groups that include significant IFPRU firms) if the RRD group:

  1. (1)

    includes an IFPRU 730k firm that is a significant IFPRU firm; or

  2. (2)

    does not include an IFPRU 730k firm.

[Note: articles 5(5) and 7(5) of RRD]

Group recovery plan for a group that includes an IFPRU 730k firm that is not a significant IFPRU firm

IFPRU 11.3.9 R

If the RRD group includes an IFPRU 730k firm that is not a significant IFPRU firm (and does not include an IFPRU 730k firm that is a significant IFPRU firm) the group recovery plan must include:

  1. (1)

    a summary of the key elements of the group recovery plan;

  2. (2)

    information on the governance of the group, including:

    1. (a)

      how the group recovery plan is integrated into the corporate governance of the group; and

    2. (b)

      the group's overall risk management framework;

  3. (3)

    a description of the legal and financial structures of the group members covered by the plan, including:

    1. (a)

      the core business lines; and

    2. (b)

      critical functions;

  4. (4)

    recovery options, including:

    1. (a)

      capital and liquidity actions required to maintain or restore the viability and financial position of the group; and

    2. (b)

      arrangements and measures to conserve or restore the own funds of each RRD institution in the group on an individual and a consolidated basis;

  5. (5)

    an assessment of the expected timeframe for implementing recovery options;

  6. (6)

    a summary of the overall capability of the group to restore its financial position following a significant deterioration, including:

    1. (a)

      the risks associated with recovery options;

    2. (b)

      an analysis of any material impediments to the effective and timely execution of the group recovery plan; and;

    3. (c)

      whether and how those impediments could be overcome;

  7. (7)

    a summary of any material changes to the group recovery plan since the previous version was sent to the FCA or other EEAconsolidating supervisor;

  8. (8)

    preparatory measures the group has taken, or plans to take, to help implement the group recovery plan; and

  9. (9)

    the measures which the group could take if any RRD institution in the group infringes an RRD early intervention condition or is likely to infringe one of those conditions in the near future.

[Note: articles (4)(1), 5(5), 7(5) and Annex A of RRD]

IFPRU 11.3.10 G

A firm or qualifying parent undertaking should include additional information from IFPRU 11 Annex 1R (Recovery plans for significant IFPRU firms and group recovery plans for groups that include significant IFPRU firms) in its group recovery plan where this information is material to the business of the group.

[Note: article 5(5) of RRD]

IFPRU 11.3.10A G

1The FCA may require a firm or qualifying parent undertaking to include the additional information referred to in IFPRU 11.3.10G in its group recovery plan by using its power under:

  1. (1)

    section 55L of the Act to require a firm; or

  2. (2)

    section 192C of the Act to direct a qualifying parent undertaking.

[Note: article 4(3) of RRD]

Recovery options

IFPRU 11.3.11 G
  1. (1)

    When identifying recovery options, a firm or qualifying parent undertaking should consider a range of scenarios of severe macroeconomic and financial stress relevant to the group's specific conditions.

  2. (2)

    The range of scenarios should include system-wide events and stress specific to individual legal persons and groups.

  3. (3)

    For each of the scenarios in (1), a group recovery plan should identify whether there are:

    1. (a)

      obstacles to implementing recovery measures within the group, including at the level of individual members covered by the plan; and

    2. (b)

      substantial practical or legal impediments to the prompt transfer of own funds or the repayment of liabilities or assets within the group.

[Note: articles 5(6) and 7(6) of RRD]

Extraordinary public financial support

IFPRU 11.3.12 R

A firm or qualifying parent undertaking must not assume any access to, or receipt of, extraordinary public financial support in its group recovery plan.

[Note: articles 5(3) and 7(5) of RRD]

Use of central bank facilities

IFPRU 11.3.13 R

If the group recovery plan includes the use of central bank facilities, the firm or qualifying parent undertaking must:

  1. (1)

    include an analysis of how and when members of the group may apply for the use of central bank facilities; and

  2. (2)

    identify those assets which would be expected to qualify as collateral.

[Note: articles 5(4) and 7(5) of RRD]

Group recovery plan indicators

IFPRU 11.3.14 R

A firm or qualifying parent undertaking must:

  1. (1)

    include a framework of indicators in its group recovery plan which identify when it, or another group member, may take appropriate actions in the plan;

  2. (2)

    ensure the group recovery plan indicators can be monitored easily; and

  3. (3)

    have arrangements to monitor the group recovery plan indicators regularly.

IFPRU 11.3.15 G

The group recovery plan indicators may relate to the group's financial position and may be of a qualitative or a quantitative nature.

IFPRU 11.3.16 R

1A firm or qualifying parent undertaking must notify the FCA without delay of a decision to take an action referred to in its recovery plan, whether or not the relevant indicator has been met.

IFPRU 11.3.17 R

A firm or qualifying parent undertaking must notify the FCA without delay of a decision not 1to take an action referred to in the group recovery plan1where the relevant indicator has been met.1

[Note: article 9(1) of RRD]

Assessment and review by the management body of the EEA parent undertaking

IFPRU 11.3.18 R
  1. (1)

    A firm that is an EEA parent undertaking or a qualifying parent undertaking must ensure that its management body assesses and approves the group recovery plan before sending it to its consolidating supervisor.

  2. (2)

    An IFPRU 730k firm that is not an EEA parent undertaking must ensure the management body of its EEA parent undertaking assesses and approves the group recovery plan before the IFPRU 730k firm sends it to its consolidating supervisor.

[Note: article 7(7) of RRD]

IFPRU 11.3.19 R

A firm or qualifying parent undertaking must demonstrate to its consolidating supervisor that:

  1. (1)

    carrying out its group recovery plan is reasonably likely to maintain or restore the viability and financial position of RRD institutions in the group, taking into account the preparatory measures that the group has taken, or plans to take; and

  2. (2)

    its group recovery plan:

    1. (a)

      is reasonably likely to be carried out quickly and effectively in situations of financial stress; and

    2. (b)

      avoids, to the maximum extent possible, any significant adverse effect on the financial system, including in scenarios which would lead other RRD institutions to implement recovery plans and group recovery plans at the same time.

[Note: article 6(1) of RRD]

Updating and submission of group recovery plans

IFPRU 11.3.20 R
  1. (1)

    A firm or qualifying parent undertaking must update the group recovery plan at least:

    1. (a)

      annually, if the group:

      1. (i)

        includes an IFPRU 730k firm that is a significant IFPRU firm; or

      2. (ii)

        does not include an IFPRU 730k firm; or

    2. (b)

      once every two years, if the group includes an IFPRU 730k firm that is not a significant IFPRU firm.

  2. (2)

    A firm or qualifying parent undertaking must also update its group recovery plan after a change to any of the following which could materially affect the group recovery plan:

    1. (a)

      its legal or organisational structure;

    2. (b)

      its business; or

    3. (c)

      its financial situation.

[Note: articles 4(1)(b), 5(2) and 7(5) of RRD]

IFPRU 11.3.21 R
  1. (1)

    A firm or qualifying parent undertaking must send the group recovery plan to its EEAconsolidating supervisor.

  2. (2)

    Where the consolidating supervisor is the FCA, a firm or qualifying parent undertaking must send the group recovery plan in line with (Recovery plans and information for resolution plans).

[Note: articles 6(1) and 7(1) of RRD]