Laura WilesHMT has added a new chapter to the Banking Act 2009: special resolution regime code of practice. The new chapter provides draft details of the recapitalisation payment mechanism introduced in the Bank Resolution (Recapitalisation) Bill, which would allow BoE to use funds from the banking sector to cover certain costs associated with resolving a failing banking institution.
The draft sets out how the recapitalisation mechanism will be used and the firms it is intended for use on. It also sets out how BoE will determine the funds required from the FSCS and assess the relative costs of the mechanism versus insolvency, and BoE accountability.
The chapter is subject to change, including by any amendments which arise out of the Bill’s parliamentary process and engagement with the Banking Liaison Panel. A finalised version of the code will be issued once the Bill comes into force.