Regulation 83 Suspension of obligations prior to exercise of stabilisation powers
The Bank of England may make an instrument suspending obligations to make a payment, or delivery, under a contract where one of the parties to the contract is a bank and the conditions specified in paragraph (2) are met in relation to the bank.
These conditions are that:
the PRA has determined that Condition 1 in section 7 of the Act is met, having consulted the Bank of England;
the Bank of England has determined that no action referred to in Condition 2 in that section will be taken immediately, having consulted the PRA, the FCA and the Treasury;
the Bank of England has determined that the suspension would prevent further deterioration of the financial position of the bank, having consulted the PRA and the FCA;
the suspension—
would allow additional time for the Bank of England to determine whether Conditions 3 and 4 in section 7 of the Act are met;
would allow additional time for determination of which stabilisation option is appropriate; or
would assist with the effective exercise of one or more of the stabilisation powers.
A suspension imposed under paragraph (1) does not apply to payments or deliveries to excluded persons.
Subject to paragraph (3), a suspension imposed under subsection (1) suspends all obligations to make a payment or delivery under the contract in question, whether the obligation is that of the bank or of any other party to the contract.
Before exercising the power in paragraph (1) the Bank of England must have regard to—
the impact a suspension might have on the orderly functioning of the financial markets; and
rules and supervisory and judicial powers to safeguard the rights of creditors (including equal treatment) in normal insolvency proceedings (in view of the potential application of such proceedings to the bank following a determination that Condition 3 or 4 in section 7 of the Act is not met).
In paragraph (5)(b), “normal insolvency proceedings” has the meaning given in section 12AA of the Act.
A suspension imposed under paragraph (1)—
must be as short in duration as is reasonably practicable;
begins when the instrument providing for the suspension is first published;
may not continue to apply after the end of the period that the Bank of England considers likely to be required to carry out the determinations referred to in paragraph (2)(c) and (d)(i) and (ii); and
in any event must end no later than midnight at the end of the first business day following the day on which the instrument providing for the suspension is published.
Where a payment or delivery under the contract concerned would have fallen due within the period of the suspension, that payment or delivery obligation is treated as falling due immediately on the expiry of the suspension.