I wish to update the House on the steps that HM Treasury has taken in regard to public joint stock company commercial bank PrivatBank.
On 14 May 2021, I approved the Bank of England’s decision to recognise the bail-in by the National Bank of Ukraine and the Ukrainian authorities between 18 and 20 December 2016 of four English law governed loans made by UK SPV Credit Finance plc to PrivatBank, in accordance with section 89H of the Banking Act 2009. The Bank of England instrument which gave effect to the recognition decision will be laid before Parliament today and has been published on the Bank of England website.
The Bank of England and HM Treasury have independently reached the determination that the bail-in of the four loans was broadly comparable in anticipated results and objectives to an equivalent UK resolution, and that none of the conditions for refusal to recognise within section 89H(4) of the Banking Act 2009 was satisfied.
Decisions over whether to recognise a third-country resolution action are regarded by the Financial Stability Board as a key aspect of an effective cross-border resolution regime. Under UK law, the Bank of England is required to make a decision on whether or not to recognise resolution actions when requested to do so by a third-country resolution authority. That decision can only be made with the approval of HM Treasury.