(This note is not part of the Order)

This Order imposes restrictions on the making of special bail-in provision in any instrument made by the Bank under Part 1 of the Act. In doing so, it implements, in part, Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms ("BRRD") (OJ L 173, 12.6.2014 p.190). Special bail-in provision can be made in relation to banks and investment firms. This Order will also apply where special bail-in provision is made in respect of banking group companies (by virtue of section 81CA(2) of the Act).

Article 4 provides that special bail-in provision cannot be made in respect of protected liabilities. Protected liabilities are liabilities subject to set-off or netting, which are not excluded from protection (under paragraph (3)), and in the case of liabilities relating to derivatives, other financial contracts or certain master agreements, which have not been set-off or netted. Article 4 does not prevent special bail-in provision from being made to convert the protected liability into the net sum that would be due following set-off or netting (or into an estimate of the net sum).