Section 89JA(4)

For section 6E (pre-resolution valuation) , substitute— Before the Bank of England makes a property transfer instrument in respect of a UK branch, it must ensure that the business of the UK branch is valued. Unless subsection (3) applies, the Bank of England must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a valuation for the purposes of subsection (1). Where the Bank of England considers that the urgency of the case makes it appropriate to make a property transfer instrument before a valuation can be carried out by a person appointed in accordance with subsection (2), the Bank may carry out a provisional valuation of the business of the UK branch for the purposes of subsection (1). The purpose of a valuation carried out pursuant to subsection (1) is to— inform the decision as to— which stabilisation option should be employed, what property, rights or liabilities (if any) are to be transferred by a property transfer instrument, the value of any consideration to be paid to the third-country institution for any property, rights or liabilities so transferred, and (where special bail-in provision is being made in the property transfer instrument) the extent to which any eligible liabilities should be modified or converted, and ensure that the full extent of any losses on the business of the UK branch is appreciated at the time the Bank of England makes a property transfer instrument. In carrying out a valuation required under subsection (1), the person carrying out the valuation must— make prudent assumptions as to possible rates of default and the severity of losses suffered by the third-country institution; disregard potential financial assistance which may be provided by the relevant third-country authority..., the Bank of England or the Treasury after the Bank has made a property transfer instrument (except for ordinary market assistance offered by the Bank on its usual terms), take account of the fact that— the Bank of England and the Treasury may recover expenses incurred in connection with the making of a property transfer instrument under section 58(2)(b), the Bank of England and the Treasury may charge interest or fees in respect of any loans or guarantees provided to the third-country institution after the Bank has made a property transfer instrument in respect of its UK branch. In subsection (5)(b) “relevant third-country authority” means an authority in a country or territory outside the United Kingdom that has functions corresponding to the stabilisation powers of the Bank of England, the FCA or the PRA. The valuation carried out under this section must follow the methodology specified in— any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are assimilated law, or technical standards made under subsection 12(a). A valuation under subsection (1) must be accompanied by— a balance sheet of the business of the UK branch as at the date of the valuation, a report on the financial position of the UK branch, an analysis and an estimate of the accounting value of the property and rights of the third-country institution which form part of the business of the UK branch, a list of the outstanding liabilities of the third-country institution which form part of the business of the UK branch (including any off-balance sheet liabilities), with the creditors subdivided into classes according to the priority their claims would receive in insolvency proceedings, and an estimate of the amount that each class of creditors and shareholders might be expected to receive if the third-country institution went into insolvency proceedings. For the purposes of subsection (7) “insolvency proceedings” means such insolvency proceedings (whether or not under the law of a country or territory outside the United Kingdom) as the person carrying out the valuation, after consultation with the Bank of England and the Treasury, considers relevant. Where appropriate, the information in subsection (7)(c) may be supplemented by an analysis and estimate of the value of the business of the UK branch on a market value basis in order to inform the decision referred to in paragraph (a)(ii) or (iii) of subsection (4). Where a provisional valuation is carried out under subsection (3)— the Bank of England need only comply with subsection (7) as far as it is reasonable to do so in the circumstances, and the requirement in subsection (8) to consult the Bank of England does not apply. A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the third-country institution in accordance with— any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are assimilated law, or technical standards made under subsection (12)(b). The Bank of England may make technical standards relating to— the methodology for assessing the value of the assets and liabilities of a branch for the purposes of a valuation under this section; the methodology for calculating and including a buffer for additional losses in the provisional valuation.

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Source: legislation.gov.uk · retrieved 2026-09-04