PART 10Claims, dividends and distribution etc.

Distribution

C1129AF1Section 129: interpretation

1

In this Act, “secondary non-preferential debts” means non-preferential debts issued by a relevant financial institution under an instrument where—

a

the original contractual maturity of the instrument is of at least one year,

b

the instrument is not a derivative and contains no embedded derivative, and

c

the relevant contractual documentation and where applicable the prospectus related to the issue of the debts explain the priority of the debts under this Act.

2

In subsection (1)(b), “derivative” has the same meaning as in Article 2(5) of Regulation (EU) No 648/2012.

3

For the purposes of subsection (1)(b) an instrument does not contain an embedded derivative merely because—

a

it provides for a variable interest rate derived from a broadly used reference rate, or

b

it is not denominated in the domestic currency of the person issuing the debt (provided that the principal, repayment and interest are denominated in the same currency).

4

In this Act, “tertiary non-preferential debts” means all subordinated debts, including (but not limited to) debts under Common Equity Tier 1 instruments, Additional Tier 1 instruments and Tier 2 instruments (all within the meaning of Part 1 of the Banking Act 2009).

5

In this section, “relevant financial institution” means any of the following—

a

a credit institution,

b

an investment firm,

c

a financial holding company,

d

a mixed financial holding company,

F3da

an investment holding company,

F4e

a financial institution which is—

i

a subsidiary of an entity referred to in paragraphs (a) to (da), and

ii

covered by the supervision of that entity on a consolidated basis by the Financial Conduct Authority in accordance with Part 9C rules or by the Prudential Regulation Authority in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms or CRR rules, or,

f

a mixed-activity holding company.

6

The definitions in Article 4 of Regulation (EU) No. 575/2013 apply for the purposes of subsection (5) F5except for the definitions of “consolidated basis” and “consolidated situation”.

F27

For the purposes of subsection (5)—

  • “on a consolidated basis” means on the basis of the consolidated situation;

  • “consolidated situation” means the situation that results from an entity being treated, for the purposes of Part 9C rules, Regulation (EU) 575/2013 or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity;

  • “CRR rules” has the meaning given in section 144A of the Financial Services and Markets Act 2000;

  • “Part 9C rules” has the meaning given in section 143F of the Financial Services and Markets Act 2000.