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5 The Implementation of the EU Bank Recovery and Resolution Directive’s Derivative Bail-in Powers in the UK

Stephen Connelly

From: Bank Resolution: The European Regime

Edited By: Jens-Hinrich Binder, Dalvinder Singh

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2022. All Rights Reserved.date: 03 December 2022

Deposit insurance schemes — Deposit protection schemes — Recovery and Resolution Plan (RRP) — Special Resolution Regime (SSR) — Regulation of banks — Derivatives — European Banking Authority (EBA)

This chapter explores the implementation of the EU Bank Recovery and Resolution Directive’s (BRRD) bail-in powers in the UK. Special bail-in powers have been in the legislative sights of HM Treasury (HMT) since the Independent Commission on Banking’s report in 2011. The chapter considers inter alia the following issues raised by the power to bail-in derivatives in the Banking Act 2009: what is a ‘derivative’ and does HMT agree with the BRRD’s definition; the critical role of close-out netting, and whether this is appropriate for all derivatives in the widest sense; the appropriateness of safeguards for protected liabilities and excluded liabilities, e.g. secured interests; and practical matters like valuation.

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