28.— (1) Subject to subsections (2) and (5) the Minister may make a proposed subordinated liabilities order in relation to the subordinated liabilities of a relevant institution to which the Minister has provided or intends to provide financial support under the Act of 2008 only if—

(a) the Minister has consulted with the Governor, and

F23[(b) after so consulting, the Minister is of the opinion that the making of a subordinated liabilities order in the terms of the proposed subordinated liabilities order—

(i) is necessary to secure the achievement of a purpose of this Act specified in the proposed subordinated liabilities order, or

(ii) is necessary for the preservation or restoration of the financial position of the relevant institution,

even though the making of that order would have the consequence of affecting (including reducing) the rights enjoyed by subordinated creditors before the order, but nothing in this subsection shall be taken as requiring the Minister to consider the possible adverse consequences of the order on the interests of a particular creditor or class of creditors of the relevant institution or to consider any submission made by a creditor on behalf of that creditor, a class of creditors or creditors generally.]

F24[(1A) If the Minister makes a proposed subordinated liabilities order in relation to a relevant institution and the intention of it or part of it is the preservation or restoration of the financial position of a credit institution, the Minister shall declare in the proposed subordinated liabilities order that the proposed subordinated liabilities order or part is made with that intention, in accordance with the CIWUD Directive.]

(2) In considering whether to make a proposed subordinated liabilities order in relation to a relevant institution the Minister shall have regard to such of the following matters as the Minister considers appropriate:

(a) the amount of the indebtedness of that institution to its subordinated creditors relative to its assets;

(b) the extent and nature of financial support provided or to be provided to that institution by the Minister under the Act of 2008 or otherwise;

(c) without prejudice to paragraph (b), the extent to which the State has, in particular, provided financial support by way of equity investment (or equivalent) in that institution;

(d) the quantum of the financial support relative to that institution’s balance sheet;

(e) the viability of that institution in the absence of that financial support;

(f) the present and likely future ability of that institution to raise equity capital from market sources;

(g) the likely extent to which the subordinated creditors would be repaid amounts owing to them in a winding up of that institution in the absence of such financial support;

F25[(h) the market value of the subordinated liabilities concerned;

(i) the effectiveness or likely effectiveness of liability management exercises of that institution in respect of its subordinated liabilities;

(j) the extent to which subordinated creditors would, if the subordinated liabilities order were made, be more likely to voluntarily agree to any of the matters referred to in subsection (4).]

(3) A proposed subordinated liabilities order may make provision for—

(a) any one or more or all of the matters referred to in subsection (4), and

(b) the granting of a shareholding in the relevant institution to the subordinated creditors affected by the order or any class of them.

(4) The matters referred to in subsection (3) are the following:

(a) the postponement, termination, suspension or other modification of specific rights, liabilities, terms and obligations associated with all or any of such subordinated liabilities including (without limiting the generality of the foregoing) any or all of the following rights, terms and obligations:

(i) the payment of interest;

(ii) the repayment of principal;

(iii) what constitutes an event of default;

(iv) collective action provisions;

(v) the timing of obligations;

(vi) the due date;

(vii) the applicable law;

(viii) the right to declare, specify or determine an event of default;

(ix) any right to enforce payment, whether by winding-up or otherwise;

(b) requiring the relevant institution to acquire those liabilities for a specified consideration, including a consideration calculated on the assumption that the State—

(i) has not provided and will not provide financial support to that institution, and

(ii) has not made and will not make any investment in that institution.

(5) Unless the relevant institution concerned consents to the making of a subordinated liabilities order in the terms of the proposed order, or exceptional circumstances (within the meaning of subsection (6)) exist, the Minister shall also, before making a proposed subordinated liabilities order—

(a) deliver a written notice to the relevant institution setting out the terms of the subordinated liabilities order, accompanied by a summary of the reasons why the Minister is of the opinion that such an order is necessary,

(b) afford the relevant institution 48 hours, or a shorter period on which the Minister and the relevant institution agree, in which to make written submissions to the Minister, and

(c) consider any submissions made under paragraph (b).

(6) Exceptional circumstances for the purposes of subsection (5) exist where—

(a) there is an imminent threat to the financial stability of the relevant institution concerned and the Minister is of the opinion that compliance with that subsection would result in significant damage to the financial stability of that relevant institution,

(b) there is an imminent threat to the stability of the financial system in the State and the Minister is of the opinion that compliance with subsection (5) would result in significant damage to the stability of that financial system, or

(c) the Minister has reasonable grounds for believing that confidentiality with regard to the subordinated liabilities order, or the possibility of the making of a subordinated liabilities order, would not be maintained and that the breach of such confidentiality would have significant adverse consequences.

(7) The power to make an order in relation to any of the matters referred to in subsection (4) is independent of, and may be exercised independently of, the power to make such an order in relation to any other such matter.