Prudential Regulation Authority Rulebook

4.1

A BRRD undertaking must not provide financial support in accordance with a group financial support agreement unless the following conditions are met:

1. (1) there is a reasonable prospect that the financial support provided significantly redresses the financial difficulties of the group member receiving the support;
2. (2) the provision of financial support has the objective of preserving or restoring the financial stability of the group as a whole or any of the members of the group and is in the interests of the BRRD undertaking providing the support;
3. (3) the financial support is provided on terms, including consideration, in accordance with 2;
4. (4) there is a reasonable prospect, on the basis of the information available to the management body of the BRRD undertaking providing financial support at the time when the decision to grant financial support is taken, that the consideration for the financial support will be paid and, in particular:
1. (a) if the financial support is given in the form of a loan, the loan will be repaid by the group entity receiving the support; and
2. (b) if the financial support is given in the form of a guarantee or any form of security, the liability of the group entity receiving the support that arises in the event that the guarantee is called upon or the security is enforced, will be paid.
5. (5) the provision of the financial support would not jeopardise the liquidity or solvency of the BRRD undertaking providing the financial support;
6. (6) the provision of the financial support would not create a threat to financial stability, in particular in the UK;
7. (7) where a firm provides the financial support, it complies at the time the financial support is provided, with the requirements of the CRD relating to capital or liquidity and any requirements imposed pursuant to Article 104(2) of the CRD and the provision of the financial support does not cause the firm to infringe those requirements;
8. (8) where a firm provides the financial support, it complies at the time when the financial support is provided, with the requirements relating to large exposures laid down in the CRR and in the Large Exposures Part, and the provision of the financial support must not cause the firm to infringe those requirements; and
9. (9) the provision of the financial support would not undermine the resolvability of the BRRD undertaking providing the financial support.

[Note: Art. 23 of the BRRD]