4.7.1.4 Continuity arrangements

Resolution authorities have the power to require a bank in resolution, or any of its group companies, to provide any services or facilities that are necessary to enable a recipient to operate effectively the business transferred to it.1 The services and facilities are restricted to operational services and facilities and do not include any form of financial support.2 The services or facilities should be provided on the same terms as they were provided under the agreement with the bank in resolution. Where there is no such agreement, the services or facilities have to be provided on reasonable terms.3

In addition, when resolution authorities exercise a resolution power, they have the power to provide for the recipient (that is, the private sector purchaser, asset management vehicle or bridge institution to which, where applicable, shares, other instruments of ownership, rights, liabilities or assets are transferred) to be treated as if it were the bank in resolution. This includes in particular the continuity of contracts entered into by the bank in resolution and the substitution for the bank in resolution in any legal proceedings relating to financial instruments, assets, rights or liabilities that have been transferred. However, rights of employees to terminate contracts of employment and rights of parties to a contract, including the right to terminate this contract, in accordance with the terms of the contract by virtue of an act or omission by the bank in resolution prior to the relevant transfer, or by the recipient after the relevant transfer, cannot be affected.4