265Bank may give directions to licensed deposit taker

1. The Bank may give a licensed deposit taker (A) a direction if the Bank—

2. has reasonable grounds to believe that 1 or more of the circumstances set out in subsection (2) apply; and
3. considers that directing A is necessary or desirable for 1 or more of the following purposes:
   1. to remedy or avoid the matter set out in subsection (2):
   2. to avoid or mitigate any adverse effects arising, or likely to arise, in connection with the matter set out in subsection (2):
   3. to avoid any contravention or further contravention of a prudential obligation in connection with the matter set out in subsection (2).

4. The circumstances are as follows:

5. A is insolvent or is likely to become insolvent:
6. the circumstances of A are such as to be prejudicial to the soundness of the financial system:
7. A’s affairs are being conducted in a manner prejudicial to—
   1. A’s solvency; or
   2. the soundness of the financial system:
8. A has contravened, may have contravened, or is likely to contravene a requirement under an applicable standard, or a condition of its licence, to maintain a minimum amount (or ratio) of capital:
9. A has contravened, may have contravened, or is likely to contravene any other prudential obligation in a material respect:
10. A has been or is operating fraudulently or recklessly:
11. an overseas supervisor has taken, or is taking, regulatory action against A or against a person that controls A (whether or not that action has been completed).

12. Subsection (2)(d) does not limit subsection (2)(e).

13. In this section, regulatory action has the same meaning as in section 280(3).