What is an intra group financial support agreement?
The European Union (EU) Bank Recovery and Resolution Directive (2014/59/EU) (BRRD) provides authorities with a common set of tools for dealing with failing banks. The BRRD is implemented in the UK through changes to UK legislation, including PRA rules.
This page is relevant to UK banks, building societies and PRA-designated investment firms (‘firms’). It is also relevant to certain UK parent undertakings of firms (‘holding companies’).
The UK is required under the BRRD to ensure that firms or holding companies, and their subsidiaries that are institutions or financial institutions covered by the consolidated supervision of the parent, may enter into an agreement ex ante to provide financial support (such as a loan, a guarantee or assets to use as collateral) to an institution that meets conditions for early intervention, provided certain safeguards are met.
Applying for application for approval of proposed intra group financial support agreement
Before entering into a proposed intra group financial support agreement, a firm or holding company that intends to enter into such an agreement and whose EEA consolidating supervisor is the PRA must obtain PRA approval of the proposed agreement. Firms or holding companies can apply for such approval using the intra group financial support agreement application form, attached under key resources.
Notification of intention to provide intra group financial support
A firm or holding company that intends to provide financial support in accordance with an intra-group financial support agreement, for which permission has been granted, must ensure that it complies with the notification requirements in chapter 6 of group financial support in the PRA rulebook.
A firm or holding company that intends to provide financial support can notify the PRA of its intention to provide intra group financial support by completing intra group financial support agreement notification form, attached under key resources.
A firm or holding company that has notified the PRA may only provide financial support if:
1) the PRA has not, within five business days from the date of receipt by the PRA of the
complete notification, prohibited or restricted the provision of the financial support; or
2) the PRA has agreed to the provision of the financial support.