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Changes to legislation:

Banking Act 2009, Part 1 is up to date with all changes known to be in force on or before 19 April 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

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Part 1U.K.Special Resolution Regime

Modifications etc. (not altering text)

[F1Chapter 1U.K. Introduction]

Textual Amendments

F1Pt. 1 Ch. 1 formed from ss. 1-3 (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 3

1OverviewU.K.

(1)The purpose of the special resolution regime for banks is to address the situation where all or part of the business of a bank has encountered, or is likely to encounter, financial difficulties.

(2)The special resolution regime consists of—

(a)the [F2five] stabilisation options,

(b)the bank insolvency procedure (provided by Part 2), and

(c)the bank administration procedure (provided by Part 3).

[F3(3)The [F4five] “stabilisation options” are—

(a)transfer to a private sector purchaser (section 11),

(b)transfer to a bridge bank (section 12),

[F5(ba)transfer to an asset management vehicle (section 12ZA),]

(c)the bail-in option (section 12A), and

(d)transfer to temporary public ownership (section 13).]

(4)Each of the [F6five] stabilisation options is achieved through the exercise of one or more of the “stabilisation powers”, which are—

[F7(za)the resolution instrument powers (sections 12A(2) and 48U to 48W),]

(a)the share transfer powers (sections 15, 16, 26 to 31 and 85), and

(b)the property transfer powers (sections 33[F8, 41A] and 42 to 46).

[F9(c)the third country instrument powers (sections 89H to 89J).]

(5)Each of the following has a role in the operation of the special resolution regime—

(a)the Bank of England,

(b)the Treasury,

[F10(c)the Prudential Regulation Authority, and

(d)the Financial Conduct Authority.]

(6)The Table describes the provisions of this Part.

SectionsTopic
Sections 1 to 3Introduction
[F11Sections 3A and 3B] [F11Pre-resolution powers]
Sections 4 to 6Objectives and code
[F11Sections 6A to 6D] [F11Mandatory write-down, conversion etc of capital instruments]
[F11Section 6E] [F11Valuation before mandatory write-down or stabilisation action]
Sections 7 to 10Exercise of powers: general
Sections 11 to 13The stabilisation options
Sections 14 to 32Transfer of securities
Sections 33 to [F1248A]Transfer of property
[F11Sections 48B to [F1348WA]] [F11Bail-in option]
[F11Sections 48X and 48Y] [F11Replacement of provisional valuation]
[F11Section 48Z] [F11Termination rights etc]
Sections 49 to 62Compensation
[F11Section 62A] [F11Independent valuer]
[F11Sections 62B to 62E] [F11Resolution administrator]
Sections 63 to 75Incidental functions
Sections 76 to [F1481A]Treasury
[F15Sections 81B to 83] [F15Groups]
[F11Sections 83ZA to 83Z2] [F11Information and enforcement]
[F16Section 83A][F16Banks not regulated by the PRA]
Sections 84 to 89Building societies, &c.
[F17Section 89A] [F17Investment firms]
F18. . .F18. . .
[F11Sections 89H to 89J] [F11Third-country resolution actions]
[F19Section 89JA Resolution of UK branches of third-country institutions]

Textual Amendments

F10S. 1(5)(c)(d) substituted for s. 1(5)(c) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 2(2) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F12Word in s. 1(6) substituted (8.4.2010) by Financial Services Act 2010 (c. 28), s. 26(1)(l), Sch. 2 para. 40

F14Word in s. 1(6) substituted (1.1.2015) by Financial Services Act 2012 (c. 21), ss. 99(3), 122(3) (with Sch. 20); S.I. 2014/3323, art. 2

F15Words in s 1(6) substituted (1.8.2014) by Financial Services Act 2012 (c. 21), ss. 100(2), 122(3) (with Sch. 20); S.I. 2014/1847, art. 2

F17Words in s 1(6) inserted (1.8.2014) by Financial Services Act 2012 (c. 21), ss. 101(2), 122(3) (with Sch. 20); S.I. 2014/1847, art. 2

Commencement Information

I1S. 1 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

2Interpretation: “bank”U.K.

(1)In this Part “bank” means a UK institution which has permission under [F20Part 4A] of the Financial Services and Markets Act 2000 to carry on the regulated activity of accepting deposits (within the meaning of section 22 of that Act, taken with Schedule 2 and any order under section 22).

(2)But “bank” does not include—

(a)a building society (within the meaning of section 119 of the Building Societies Act 1986),

(b)a credit union within the meaning of section 31 of the Credit Unions Act 1979 [F21or a credit union within the meaning of Article 2(2) of the Credit Unions (Northern Ireland) Order 1985], or

(c)any other class of institution excluded by an order made by the Treasury.

(3)In subsection (1) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom.

(4)Where a stabilisation power is exercised in respect of a bank, it does not cease to be a bank for the purposes of this Part if it later loses the permission referred to in subsection (1).

(5)An order under subsection (2)(c)—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(6)Section 84 applies this Part to building societies with modifications.

(7)Section 89 allows the application of this Part to credit unions.

[F22(8)Section 89A applies this Part to investment firms with modifications.]

F23(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F24(10)Section 89JA applies this Part to UK branches of third-country institutions with modifications.]

Textual Amendments

Commencement Information

I2S. 2 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I3S. 2 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

3Interpretation: other expressionsU.K.

[F25(1)] In this Part—

  • [F26“Additional Tier 1 instruments” means capital instruments that meet the conditions laid down in Article 52(1) of the capital requirements regulation (or which qualify as Additional Tier 1 instruments by virtue of Chapter 2 [F27or 4] of Title I of Part Ten of that regulation),]

  • [F28“bail-in liabilities”, of an undertaking, means liabilities and capital instruments that—

    (a)

    do not qualify as Common Equity Tier 1 instruments, Additional Tier 1 instruments or Tier 2 instruments, of the undertaking, and

    (b)

    are not excluded liabilities listed in section 48B(8),]

  • [F26“the capital requirements regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26th June 2013 on prudential requirements for credit institutions and investment firms, [F29as it [F30forms part of [F31assimilated] law],]]

  • [F32“CRR rules” has the meaning given in section 144A of the Financial Services and Markets Act 2000,]

  • [F33“client assets” means assets which an institution has undertaken to hold for a client (whether or not on trust, and whether or not the undertaking has been complied with),]

  • [F26“Common Equity Tier 1 instruments” means capital instruments that meet the conditions laid down in Article 28(1) to (4), 29(1) to (5) or 31(1) of the capital requirements regulation (or which qualify as Common Equity Tier 1 instruments by virtue of Chapter 2 of Title I of Part Ten of that regulation),]

  • [F26“critical functions”, subject to [F34subsections (2) and (2A)], means activities, services or operations [F35(wherever carried out)] the discontinuance of which is likely F36...—

    (a)

    to lead to the disruption of services that are essential to the economy [F37of the United Kingdom], or

    (b)

    to disrupt financial stability [F38in the United Kingdom],

    due to the size, market share, external and internal connectedness, complexity or cross-border activities of a bank or a group which includes a bank (with particular regard to the substitutability of those activities, services or operations),;]

  • [F39“FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);]

  • [F40“normal insolvency proceedings” means the collective insolvency proceedings which—

    (a)

    entail the partial or total divestment of a debtor and the appointment of a liquidator or administrator (or a similar officeholder),

    (b)

    are normally applicable to institutions under the law of any part of the United Kingdom, and

    (c)

    are either specific to those institutions or generally applicable to any natural or legal person;

    and, in particular, includes the bank insolvency procedure and the bank administration procedure;]

  • [F41“eligible liabilities” has the meaning given by section 3A(4A),]

  • [F42“extraordinary public financial support” means financial assistance that is provided by the Treasury or the Bank of England in order to preserve or restore the viability, liquidity or solvency of a bank, a banking group company or a group which includes a bank, other than—

    (a)

    ordinary market assistance offered by the Bank of England on its usual terms, or

    (b)

    a liquidity facility which is provided—

    (i)

    to a bank that is facing temporary liquidity problems but is solvent, and

    (ii)

    by the Bank of England on its own initiative and on its own terms,

    and for the purposes of this definition “group” (other than in “banking group company”) has the meaning given in subsection (2)(b);]

  • [F43“the PRA” means the Prudential Regulation Authority,

  • “the FCA” means the Financial Conduct Authority, and]

  • “financial assistance” has the meaning given by section 257.

  • [F26“own funds” means own funds as defined in Article 4.1(118) of the capital requirements regulation (read with Title I of Part Ten of that regulation),]

  • [F26“own funds requirements” means the requirements laid down in [F44Articles 92 to 93 of the capital requirements regulation and Article 94 of Chapter 3 of the Trading Book (CRR) Part of the PRA Rulebook] (read with Title I of Part Ten of that regulation),]

  • [F26“the recovery and resolution directive” means 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 [F45as last amended by Directive (EU) 2019/879 of the European Parliament and of the Council of 20th May 2019],]

  • [F26“relevant capital instruments” means Additional Tier 1 instruments and Tier 2 instruments,]

  • [F46“relevant internal liabilities” of a bank or banking group company means eligible liabilities held by a resolution entity in the same resolution group as the bank or banking group company, either directly or indirectly (through other entities in the same resolution group that bought the liabilities from the bank or banking group company),]

  • “resolution entity” means an entity which is identified by the Bank of England in a resolution plan or a group resolution plan under Part 5 of the Bank Recovery and Resolution (No.2) Order 2014 as an entity in respect of which—

    (a)

    the Bank of England might exercise a stabilisation power, [F47or]

    (b)

    F48...

    (c)

    a relevant third-country authority might take third-country resolution action,

    and for the purposes of this definition, F49... “relevant third-country authority” has the meaning given by section 81AA(14) F49... and “third-country resolution action” has the meaning given by section 89H(7),

  • “resolution group” means a resolution entity together with any subsidiary that—

    (a)

    is not a resolution entity itself,

    (b)

    is not a subsidiary of another resolution entity, and

    (c)

    where the subsidiary is established in a [F50country or territory other than the United Kingdom], is stated by the group resolution plan under Part 5 of the Bank Recovery and Resolution (No.2) Order 2014 to be included in the resolution group,

    and for the purpose of this definition “subsidiary” has the meaning given by Article 4.1(16) of the capital requirements regulation,

  • [F26“Tier 2 instruments” means capital instruments or subordinated loans that meet the conditions laid down in Article 63 of the capital requirements regulation (or which qualify as Tier 2 instruments by virtue of Chapter 2 [F51or 4] of Title I of Part Ten of that regulation),]

[F52(2)For the purposes of the definition of “critical functions” in subsection (1)—

[F53(a)Article 6 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of critical functions) applies,] and

(b)“group” means a parent undertaking within the meaning given by Article 4.1(15)(a) of the capital requirements regulation and its subsidiaries within the meaning given by Article 4.1(16) of that regulation.]

[F54(2A)The Treasury may by regulations made by statutory instrument specify criteria for the determination of the activities, services and operations referred to in the definition of “critical functions”.

(2B)The power conferred by subsection (2A) includes—

(a)power to amend or revoke Article 6 of Commission Delegated Regulation (EU) 2016/778; and

(b)power to amend or repeal subsection (2)(a).

(2C)A statutory instrument containing regulations under subsection (2A) is subject to annulment in pursuance of a resolution of either House of Parliament.]

[F55(3)In this Part references to a director include, in relation to an undertaking which has no board of directors, a member of the equivalent management body responsible for the management of the undertaking concerned.]

[F56(4)In this Part a reference to the PRA rulebook is to the rulebook published by the PRA containing rules made by the PRA under the Financial Services and Markets Act 2000 as the rulebook has effect on [F571 January 2022].]

Textual Amendments

F25S. 3(1): s. 3 renumbered as s. 3(1) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 5(2)

Commencement Information

I4S. 3 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F58Chapter 2U.K.Pre-resolution powers of the Bank of England

Textual Amendments

U.K.

3A.Removal of impediments to the exercise of stabilisation powers etcU.K.

(1)In this section “relevant person” means—

(a)an institution authorised for the purpose of the Financial Services and Markets Act 2000 by the PRA or FCA,

(b)a parent of such an institution which—

(i)is a financial holding company or a mixed financial holding company; and

(ii)is established in, or formed under the law of any part of, the United Kingdom, or

(c)a subsidiary of such an institution or of such a parent which—

(i)is a financial institution authorised by the PRA or FCA, and

(ii)is established in, or formed under the law of any part of, the United Kingdom.

(2)The Bank of England may give directions to a relevant person requiring that person to take measures which, in the opinion of the Bank of England, are required to address impediments to—

(a)the effective exercise of the stabilisation powers, or

(b)the winding up of that person (whether by use of the bank insolvency procedure provided for under Part 2 of this Act or otherwise).

(3)The power conferred by subsection (2) includes a power to direct a relevant person—

(a)to amend a group financial support agreement;

(b)where there is no such agreement, to review the need to enter into one;

(c)to enter into an agreement for the provision of services relating to the provision of critical functions;

(d)to limit that person’s maximum individual and aggregate exposures (with “exposure” for this purpose having the meaning given in the capital requirements regulation);

(e)to produce information which is relevant to the exercise of the stabilisation powers, and to provide that information to the Bank of England;

(f)to dispose of specified assets;

(g)to cease carrying out specified activities, or observe restrictions in relation to the carrying out of specified activities;

(h)to cease the development of new or existing business operations, or observe restrictions in relation to the development of such operations;

(i)in order to ensure that it is possible for the performance of critical functions to be legally or operationally separated from the performance of other functions—

(i)to change its legal or operational structure, or

(ii)so far as it is able to do so, to change the legal or operational structure of a subsidiary;

(j)to establish a financial holding company which is not a subsidiary of an institution, another financial holding company or a mixed financial holding company.

[F59(4)The Bank of England may give directions to a relevant person requiring that person to maintain or issue particular kinds of bail-in liabilities.

(4A)Where the Bank of England gives directions to a relevant person under subsection (4) the bail-in liabilities that the person is required to maintain or issue are referred to, in relation to that person, as “eligible liabilities”.

(4B)The Bank of England may give directions to a relevant person requiring that person—

(a)to maintain a minimum requirement for own funds and eligible liabilities, and

(b)for the purpose of paragraph (a), to change the maturity profile of own funds instruments and eligible liabilities or take other specified steps.

(4C)The Bank of England must not exercise the power under subsection (4B)(b) in relation to the maturity profile of own funds instruments—

(a)in the case of a relevant person which is—

(i)an institution authorised for the purpose of the Financial Services and Markets Act 2000 by the PRA, or

(ii)a parent of such an institution or subsidiary of such an institution or such a parent for the purposes of paragraph (b) or (c) of subsection (1),

without the consent of the PRA, or

(b)in the case of a relevant person to which paragraph (a) does not apply, without the consent of the FCA.]

(5)Under subsection [F60(4B)], the Bank may, in particular, direct a relevant person to endeavour to re-negotiate any eligible liability or relevant capital instruments issued by that person, for the purpose of ensuring that any decision by the Bank to write down or convert the liability or instrument concerned would have effect under the law which governs that liability or instrument.

(6)The Bank may give directions to a relevant MAHC requiring it to establish a separate financial holding company as a parent of an institution for the purpose of—

(a)facilitating the exercise of the stabilisation powers, or

(b)ensuring that the exercise of a stabilisation power does not have an adverse effect on the non-financial part of the group of the relevant MAHC.

(7)Directions under this section—

(a)must be in writing, and

(b)may be given with general effect or with respect to a particular relevant person or class of relevant persons.

(8)In this section—

  • “financial holding company” has the meaning given by Article 4.1(20) of the capital requirements regulation;

  • “financial institution” has the meaning given by Article 4.1(26) of the capital requirements regulation;

  • “group” has the meaning given in section 3(2)(b);

  • “group financial support agreement” has the meaning given by section 192JB(4) of the Financial Services and Markets Act 2000;

  • “institution” (except in the phrase “financial institution”) means a bank [F61, building society (within the meaning of section 119 of the Building Societies Act 1986)] or investment firm;

  • “mixed financial holding company” has the meaning given by Article 4.1(21) of the capital requirements regulation;

  • “parent” means a parent undertaking within the meaning given by section 1162 of the Companies Act 2006;

  • “relevant MAHC” means a mixed activity holding company (within the meaning given by Article 4.1(22) of the capital requirements regulation) which has at least one subsidiary which—

    (a)

    is an institution, and

    (b)

    is not a subsidiary of a financial holding company which is also a subsidiary of the mixed activity holding company; and

  • “subsidiary” means a subsidiary undertaking within the meaning given by section 1162 of the Companies Act 2006.

Textual Amendments

3B.Safeguards relating to directions under section 3AU.K.

(1)A direction given to a relevant person under section 3A must be accompanied by a notice which—

(a)states when the direction takes effect (see subsections (2) and (3)),

(b)gives the Bank of England’s reasons for giving the direction, and,

(c)specifies a reasonable period within which the relevant person may make representations to the Bank about the direction.

(2)The direction may, if the Bank of England reasonably considers it necessary, take effect—

(a)immediately it is given to the relevant person, or

(b)on a later date specified in the direction.

(3)In any other case the direction takes effect when—

(a)it has been confirmed by a notice under subsection (5), and

(b)the period during which the direction may be referred to the Upper Tribunal (under subsection (6)) has expired and, if the matter was so referred, the reference and any appeal against the Tribunal’s determination, has been finally disposed of.

(4)Where representations are made by the relevant person within the period specified under subsection (1)(c), the Bank must, within a reasonable period, consider those representations and decide—

(a)whether to confirm or revoke the direction, and

(b)if the direction is revoked, whether to give a different direction.

(5)The Bank must—

(a)if no representations are made within that specified period, give the relevant person written notice that the direction is confirmed, and

(b)if representations are made, give the relevant person written notice of its decision under subsection (4).

(6)If the relevant person is aggrieved by the confirmation of the direction, that person may refer the matter to the Upper Tribunal.

(7)A notice under subsection (5)(a) or (b) confirming the direction must—

(a)inform the relevant person of the right to refer the matter to the Upper Tribunal, and

(b)indicate the procedure on such a reference.

(8)A notice given under subsection (5)(b) of a decision by the Bank to give a different direction must comply with subsection (1).

(9)The Bank must prepare one or more statements of its policy with respect to the giving of directions under section 3A.

(10)No power conferred by section 3A may be exercised before the statement of policy in relation to the exercise of that power has been published.]

[F62Chapter 3 U.K. Special resolution action]

Textual Amendments

F62Pt. 1 Ch. 3 formed from ss. 4-83 (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 7

Objectives and codeU.K.

4Special resolution objectivesU.K.

(1)This section sets out the special resolution objectives.

(2)The relevant authorities shall have regard to the special resolution objectives in using, or considering the use of—

(a)the stabilisation powers,

(b)the bank insolvency procedure, or

(c)the bank administration procedure.

(3)For the purpose of this section the relevant authorities are—

(a)the Treasury,

[F63(b)the PRA,

(ba)the FCA, and]

(c)the Bank of England.

[F64(3A)Objective 1 is to ensure the continuity of banking services in the United Kingdom and of critical functions.

(4)Objective 2 is to protect and enhance the stability of the financial system of the United Kingdom, including in particular by—

(a)preventing contagion (including contagion to market infrastructures such as investment exchanges, clearing houses [F65, recognised CSDs within the meaning of section 285 of the Financial Services and Markets Act 2000] and central counterparties [F66authorised or recognised in the United Kingdom in accordance with Article 14 or 25] of Regulation (EU) 648/2012 of the European Parliament and the Council of 4th July 2012 on OTC derivatives, central counterparties and trade repositories) [F67as it forms part of [F68assimilated] law], and

(b)maintaining market discipline.

(5)Objective 3 is to protect and enhance public confidence in the stability of the financial system of the United Kingdom.

(6)Objective 4 is to protect public funds, including by minimising reliance on extraordinary public financial support.

[F69(7)Objective 5 is to protect investors and depositors to the extent that they have investments or deposits covered by the FSCS.]

(8)Objective 6, which applies in any case in which client assets may be affected, is to protect those assets.

(9)Objective 7 is to avoid interfering with property rights in contravention of a Convention right (within the meaning of the Human Rights Act 1998).]

(10)The order in which the objectives are listed in this section is not significant; they are to be balanced as appropriate in each case.

Textual Amendments

F63S. 4(3)(b)(ba) substituted for s. 4(3)(b) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 5 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F64S. 4(3A)-(9) substituted for s. 4(4)-(9) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 8(2)

Commencement Information

I5S. 4 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

5Code of practiceU.K.

[F70(1)The Treasury shall issue a code of practice about—

(a)the discharge of the duty imposed by section 6B (mandatory write-down, conversion etc of capital instruments), and

(b)the use of—

(i)the stabilisation powers,

(ii)the bank insolvency procedure, and

(iii)the bank administration procedure.]

(2)The code may, in particular, provide guidance on—

(a)how the special resolution objectives are to be understood and achieved,

(b)the choice between different options,

(c)the information to be provided in the course of a consultation under this Part,

(d)the giving of advice by one relevant authority to another about whether, when and how the stabilisation powers are to be used,

(e)how to determine whether Condition 2 in section 7 is met,

(f)how to determine whether [F71tests for the use of the stabilisation powers in sections 8 and 8ZA are] satisfied,

(g)sections 63 and 66, and

(h)compensation.

(3)Sections 12[F72, 12ZA] and 13 require the inclusion in the code of certain matters about bridge banks[F73, asset management vehicles] and temporary public ownership.

(4)The relevant authorities shall have regard to the code.

(5)For the purpose of this section the relevant authorities are—

(a)the Treasury,

[F74(b)the PRA,

(ba)the FCA, and]

(c)the Bank of England.

Textual Amendments

F74S. 5(5)(b)(ba) substituted for s. 5(5)(b) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 6 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I6S. 5 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I7S. 5 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

6Code of practice: procedureU.K.

F75(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F76(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)The Treasury may revise and re-issue the code of practice.

[F77(4)Before re-issuing the code of practice the Treasury must consult—

(a)the PRA,

(b)the FCA,

(c)the Bank of England, and

(d)the scheme manager of the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000).

(5)As soon as is reasonably practicable after re-issuing the code of practice the Treasury shall lay a copy before Parliament.]

Textual Amendments

F77S. 6(4)(5) substituted for s. 6(4) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 7(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I8S. 6 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I9S. 6 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F78Mandatory write-down, conversion etc of capital instrumentsU.K.

Textual Amendments

F78Ss. 6A-6D and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 10

6A.Cases where mandatory write-down, conversion, etc appliesU.K.

(1)Section 6B applies in relation to a bank in the cases set out in subsections (2) to (6).

(2)Case 1 is where—

(a)the conditions imposed by sections 7 to 9 on the exercise of a stabilisation power in respect of the bank are met,

(b)the Bank of England or the Treasury (as the case may be) has decided to exercise the power, and

(c)section 12AA (mandatory write-down etc in bail-in cases) does not apply.

(3)Case 2 is where—

(a)the PRA is satisfied that Condition 1 in section 7 is met in respect of the bank, and

(b)the Bank of England is satisfied that—

(i)(ignoring section 6B) Condition 2 in section 7 is met, and

(ii)that Condition will continue to be met unless the action required by section 6B is taken in respect of the bank.

(4)Case 3 is where—

(a)the bank is viable,

(b)it is a subsidiary,

(c)relevant capital instruments issued by it are recognised for the purpose of meeting own funds requirements on an individual basis and on a consolidated basis, and

(d)[F79the Bank of England makes a determination] that the group of which the bank is a member will not be viable unless the action required by section 6B is taken in relation to those instruments.

(5)Case 4 is where—

(a)the bank is a parent undertaking,

(b)relevant capital instruments issued by the bank are recognised for the purposes of meeting own funds requirements on an individual basis at the level of the parent undertaking or on a consolidated basis, and

(c)the Bank of England makes a determination that the group will not be viable unless the action required by section 6B is taken in relation to those instruments.

(6)Case 5 is where—

(a)extraordinary public financial support is required by the bank other than in circumstances where subsection (5E) of section 7 applies by virtue of paragraph (c) of that subsection, and

(b)the Bank of England is satisfied F80... that, in order for the bank to fulfil its own funds requirements, relevant capital instruments of the bank need to be written down or converted into Common Equity Tier 1 instruments (or both).

(7)For the purposes of Case 3, the bank is viable unless—

(a)the PRA is satisfied that the bank is failing or likely to fail (within the meaning of section 7(5C)), and

(b)having regard to timing and other relevant circumstances, the Bank of England is satisfied that it is not reasonably likely that (ignoring section 6B and the stabilisation powers) action will be taken by or in respect of the bank that will result in the bank no longer being a bank which is failing or likely to fail.

(8)For the purposes of Cases 3 and 4 a group is not viable if (and only if)—

(a)the consolidating supervisor is satisfied that a requirement under the capital requirements regulation[F81or CRR rules] that applies, on a consolidated basis, to a bank which is a member of the group is infringed (or will in the near future be infringed) in a way that justifies action by the consolidating supervisor, and

(b)having regard to timing and other relevant circumstances (but ignoring section 6B and the stabilisation powers), it is not reasonably likely that action will be taken by or in respect of the bank that will prevent the requirement being infringed.

(9)In this section—

  • F82...

  • [F83“on a consolidated basis” means on the basis of the consolidated situation,

  • “consolidated situation” means the situation that results from an entity being treated, for the purposes of the capital requirements regulation or CRR rules (as appropriate), as if that entity and one or more other entities formed a single entity,

  • “consolidating supervisor” means supervisor responsible for the exercise of supervision of an entity on a consolidated basis,]

  • “group” has the meaning given in section 3(2)(b),

  • “parent undertaking” has the meaning given by Article 4.1(15)(a) of the capital requirements regulation, and

  • “subsidiary” has the meaning given by Article 4.1(16) of the capital requirements regulation.

Textual Amendments

F80Words in s. 6A(6)(b) omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 6

6B.Mandatory write-down, conversion, etc of capital instruments [F84and liabilities] U.K.

(1)In a case where this section applies, the Bank of England must without delay make—

(a)an instrument in relation to the bank containing the mandatory reduction provision, or

(b)two or more instruments which (taken together) contain that provision.

An instrument made under this subsection is a “mandatory reduction instrument”.

(2)“The mandatory reduction provision” is provision which produces the following results—

(a)existing Common Equity Tier 1 instruments of the bank are cancelled, transferred or diluted in accordance with the principle that losses should be borne first by the holders of such instruments,

(b)the principal amount of Additional Tier 1 instruments of the bank is reduced or such instruments are converted (directly or indirectly) into Common Equity Tier 1 instruments (or both)—

(i)to the extent required to achieve the special resolution objectives set out in section 4, or

(ii)to the extent of the capacity of the relevant capital instruments,

whichever is lower; F85...

(c)the principal amount of Tier 2 instruments [F86of the bank] is reduced or Tier 2 instruments are converted (directly or indirectly) into Common Equity Tier 1 instruments (or both)—

(i)to the extent required to achieve the special resolution objectives set out in section 4 (so far as not achieved under paragraph (b)), or

(ii)to the extent of the capacity of the relevant capital instruments,

whichever is lower; [F87and

(d)where this section applies by virtue of section 6A(3) (Case 2) and the bank is not a resolution entity, but is in a resolution group, the principal amount of the relevant internal liabilities is reduced or such liabilities are converted (directly or indirectly) into Common Equity Tier 1 instruments (or both)—

(i)to the extent required to achieve the special resolution objectives set out in section 4 (so far as not achieved under paragraphs (b) and (c)), or

(ii)to the extent of the capacity of such liabilities,

whichever is lower.]

(3)For the purposes of subsection (2), a mandatory reduction instrument may contain—

(a)provision cancelling existing Common Equity Tier 1 instruments of the bank,

(b)provision transferring (directly or indirectly), to holders of Additional Tier 1 instruments [F88, Tier 2 instruments or relevant internal liabilities] of the bank, Common Equity Tier 1 instruments of the bank,

(c)provision converting relevant capital instruments [F89or relevant internal liabilities] of the bank (directly or indirectly) into Common Equity Tier 1 instruments of the bank or a parent undertaking of the bank,

(d)provision cancelling a liability owed by the bank,

(e)provision modifying, or changing the form of, a liability owed by the bank,

(f)provision that a contract under which the bank has a liability is to have effect as if a specified right had been exercised under it.

(4)The following rules apply to the interpretation of subsection (3)—

  • A. The reference to cancelling a liability owed by the bank includes a reference to cancelling a contract under which the bank has a liability.

  • B. The reference to modifying a liability owed by the bank includes a reference to modifying the terms (or the effect of the terms) of a contract under which the bank has a liability.

  • C. The reference to changing the form of a liability owed by the bank includes, for example—

    (i)

    converting an instrument under which the bank owed a liability from one form or class to another,

    (ii)

    replacing such an instrument with another instrument of a different form or class, or

    (iii)

    creating a new security (of any form or class) in connection with the modification of such an instrument.

(5)Provision made by virtue of subsection (3) may include—

(a)provision for securities issued by a specified bank to be transferred to a resolution administrator (see section 62B) or another person;

(b)where a previous mandatory reduction instrument (“the original instrument) has contained provision under paragraph (a), provision for the transfer of—

(i)securities which were transferred by the original instrument, or

(ii)securities which were issued by the bank after the original instrument was made.

(6)Provision made in accordance with subsection (5) may relate to—

(a)specified securities, or

(b)securities of a specified description.

(7)Where the Bank of England has exercised the power in subsection (5)(a) to transfer securities to a resolution administrator, the Bank must exercise its functions under this Part with a view to ensuring that any securities held by that person in the capacity of resolution administrator are so held only for so long as is, in the Bank of England’s opinion, appropriate having regard to the special resolution objectives.

(8)Where Case 1 in section 6A applies, the Bank must comply with subsection (1) before or at the same time as exercising the stabilisation power.

(9)Where Case 3 in section 6A applies, the principal amount of a relevant capital instrument issued by the bank must not be reduced under this section to a greater extent, or converted on worse terms, than equally ranked capital instruments at the level of any parent undertaking of the bank which are reduced, or converted

[F90(a)pursuant to this section as it applies in relation to a banking group company by virtue of section 81AA, or

(b)in the course of applying the bail-in option provided for by section 12A or section 81BA.]

(10)In this section “parent undertaking” has the meaning given by Article 4.1(15)(a) of the capital requirements regulation.

Textual Amendments

6C.Mandatory reduction instruments: implementation of requirements of section 6BU.K.

(1)Where the principal amount of a relevant capital instrument [F91or a relevant internal liability] is reduced under section 6B—

(a)the reduction must be permanent, subject to any provision made by virtue of section 48Y(1)(a);

(b)no liability to the holder of the relevant capital instrument [F92or the relevant internal liability] remains under, or in connection with, so much of the amount of the instrument [F93or relevant internal liability] as constitutes the reduction, except for—

(i)any liability already accrued in a case where the principal amount of the instrument [F93or the relevant internal liability] is not reduced or converted (or both) to the full extent of its capacity, and

(ii)any liability for damages that may arise as a result of any challenge to the legality of the exercise of the power of reduction;

(c)no compensation is to be paid to any holder of the relevant capital instrument [F94or the relevant internal liability] other than in accordance with subsection (4).

(2)Nothing in subsection (1)(b) prevents the provision of Common Equity Tier 1 instruments to a holder of relevant capital instruments [F95or relevant internal liabilities] in accordance with subsection (4).

(3)In order to effect a conversion of relevant capital instruments [F96or relevant internal liabilities] under section 6B, the Bank of England may require the bank, or a UK parent undertaking, to issue Common Equity Tier 1 instruments to the holders of the relevant capital instruments [F96or relevant internal liabilities].

(4)The relevant capital instruments [F97or relevant internal liabilities] may only be so converted if—

(a)the Common Equity Tier 1 instruments are issued by the bank, or by a [F98UK parent] undertaking of the bank with the agreement of the [F99Bank of England],

(b)the Common Equity Tier 1 instruments are issued prior to the issue of any shares by the bank, or by a parent undertaking of the bank, for the purposes of provision of own funds by the [F100Treasury],

(c)the Common Equity Tier 1 instruments are awarded and transferred without delay following the exercise of the conversion power, and

(d)the conversion rate that determines the number of Common Equity Tier 1 instruments that are provided in respect of each relevant capital instrument [F101or relevant internal liability] [F102represents appropriate compensation to the affected creditor for any loss incurred in consequence of the conversion of that instrument or liability.]

[F103(4A)Where different conversion rates are applied to different classes of instrument or liability, a lower conversion rate must be applied to subordinated debt than is applied to debts ranking higher in the hierarchy of claims in normal insolvency proceedings.]

(5)For the purposes of the provision of Common Equity Tier 1 instruments in accordance with subsections (2), (3) and (4), the Bank of England may require the bank or a UK parent undertaking of the bank to maintain at all times the necessary prior authorisation to issue the relevant number of Common Equity Tier 1 instruments.

(6)Before making a mandatory reduction instrument, the Bank must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)In this section—

  • “parent undertaking” has the meaning given by Article 4.1(15)(a) of the capital requirements regulation,

  • F104...

  • “UK parent undertaking” means a parent undertaking that is incorporated in, or formed under the law of, any part of the United Kingdom.

Textual Amendments

6D.Mandatory reduction instruments: supplementary mattersU.K.

(1)The following provisions apply in relation to a mandatory reduction instrument as they apply to a resolution instrument—

(a)section 48L(3) and (5) (powers relating to securities issued by the bank),

(b)section 48O (power to direct directors of the bank),

(c)section 48Q (continuity),

(d)section 48R (execution and registration of instruments etc),

(e)section 48S (general matters), and

(f)section 48T (procedure).

(2)Where the Bank of England makes one or more mandatory reduction instruments in respect of a bank, the Bank must, on request by the Treasury, report to the Chancellor of the Exchequer about—

(a)the exercise of the power to make a mandatory reduction instrument,

(b)the activities of the bank, and

(c)any other matters in relation to the bank that the Treasury may specify.

(3)In relation to the matters in subsection (2)(a) and (b), the report must comply with any requirements that the Treasury may specify.

(4)The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.]

[F105Valuation before mandatory write-down of capital or stabilisation actionU.K.

Textual Amendments

F105S. 6E and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 11

6E.Pre-resolution valuationU.K.

(1)Before the Bank of England makes a mandatory reduction instrument or exercises any stabilisation power in respect of a bank, it must ensure that the assets and liabilities of the bank are valued.

(2)Unless subsection (3) applies, the Bank of England must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a valuation for the purposes of subsection (1).

(3)Where the Bank of England considers that the urgency of the case makes it appropriate to make a mandatory reduction instrument, or exercise a stabilisation power, before a valuation can be carried out by a person appointed in accordance with subsection (2), the Bank may carry out a provisional valuation of the assets and liabilities of the bank for the purposes of subsection (1).

(4)The purpose of a valuation carried out pursuant to subsection (1) is to—

(a)inform the decision as to—

(i)whether the conditions for the making of a mandatory reduction instrument or the exercise of a stabilisation power is satisfied,

(ii)which stabilisation option should be employed,

(iii)the extent to which any shares, capital instruments or eligible liabilities should be cancelled, diluted, transferred, written down or converted through the use of a mandatory reduction instrument or a resolution instrument,

(iv)what assets, liabilities or securities (if any) are to be transferred by a property transfer instrument or a share transfer instrument, and

(v)the value of any consideration to be paid to the bank or the owners of the securities for any assets, liabilities or securities so transferred, and

(b)ensure that the full extent of any losses on the assets of that bank is appreciated at the time the Bank of England makes a mandatory reduction instrument or exercises a stabilisation power.

(5)In carrying out a valuation required under subsection (1), the person carrying out the valuation must—

(a)make prudent assumptions as to possible rates of default and the severity of losses suffered by the bank,

(b)disregard potential financial assistance which may be provided by the Bank of England or the Treasury after the Bank has made any mandatory reduction instrument or exercised any stabilisation power (except for ordinary market assistance offered by the Bank on its usual terms),

(c)take account of the fact that—

(i)the Bank of England and the Treasury may recover expenses incurred in connection with the exercise of a stabilisation power under section 58(2)(b),

(ii)the Bank of England and the Treasury may charge interest or fees in respect of any loans or guarantees provided to the bank after the Bank has made any mandatory reduction instrument or exercised any stabilisation power in respect of it.

[F106(6)The valuation carried out under this section must follow the methodology specified in—

(a)any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are [F107assimilated] law, or

(b)technical standards made under subsection (11)(a)].

(7)A valuation under subsection (1) must be accompanied by—

(a)a balance sheet of the bank as at the date of the valuation,

(b)a report on the financial position of the bank,

(c)an analysis and an estimate of the accounting value of the assets of the bank,

(d)a list of the outstanding liabilities of the bank (including any off-balance sheet liabilities), with the creditors subdivided into classes according to the priority their claims would receive in insolvency proceedings, and

(e)an estimate of the amount that each class of creditors and shareholders might be expected to receive if the bank went into insolvent liquidation.

(8)Where appropriate, the information in subsection (7)(c) may be supplemented by an analysis and estimate of the value of the assets and liabilities of the bank on a market value basis in order to inform the decision referred to in paragraph (a)(iv) or (v) of subsection (4).

(9)Where a provisional valuation is carried out under subsection (3), the Bank need only comply with subsection (7) as far as it is reasonable to do so in the circumstances.

[F108(10)A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the bank in accordance with—

(a)any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are [F109assimilated] law, or

(b)technical standards made under subsection (11)(b).

(11)The Bank of England may make technical standards relating to—

(a)the methodology for assessing the value of the assets and liabilities of a bank for the purposes of a valuation under this section;

(b)the methodology for calculating and including a buffer for additional losses in the provisional valuation.]]

Textual Amendments

Exercise of powers: generalU.K.

7General conditionsU.K.

[F110(1)A stabilisation power may be exercised in respect of a bank only if—

(a)the PRA is satisfied that Condition 1 is met, and

(b)the Bank of England is satisfied that Conditions 2, 3 and 4 are met.

(2)Condition 1 is that the bank is failing or likely to fail.

(3)Condition 2 is that, having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the bank that will result in Condition 1 ceasing to be met.

(4)Condition 3 is that the exercise of the power is necessary having regard to the public interest in the advancement of one or more of the special resolution objectives.

(5)Condition 4 is that one or more of the special resolution objectives would not be met to the same extent by the winding up of the bank (whether under Part 2 or otherwise).

(5A)The PRA must treat Condition 1 as met if satisfied that it would be met but for financial assistance provided by—

(a)the Treasury, or

(b)the Bank of England,

disregarding ordinary market assistance offered by the Bank on its usual terms.

(5B)The Bank of England must treat Condition 2 as met if satisfied that it would be met but for financial assistance of the kind mentioned in subsection (5A).

(5C)For the purposes of Condition 1, a bank is failing or likely to fail if—

(a)it is failing, or is likely to fail, to satisfy the threshold conditions in circumstances where that failure would justify the variation or cancellation by the PRA under section 55J of the Financial Services and Markets Act 2000 of the bank’s permission under Part 4A of that Act to carry on one or more regulated activities,

(b)the value of the assets of the bank determined [F111is less than the amount of its liabilities,]

(c)the bank is unable to pay its debts or other liabilities as they fall due,

(d)[F112paragraph (b) or (c) (or both)] will, in the near future, apply to the bank, or

(e)extraordinary public financial support is required in respect of the bank and subsection (5E) does not apply to that support.

(5D)“The threshold conditions” means the threshold conditions, as defined by subsection (1) of section 55B of the Financial Services and Markets Act 2000, for which the PRA is treated as responsible under subsection (2) of that section.

(5E)This subsection applies where, in order to remedy a serious disturbance in the economy of the United Kingdom and preserve financial stability, the extraordinary public financial support takes any of the following forms—

(a)a State guarantee to back liquidity facilities provided by [F113the Bank of England],

(b)a State guarantee of newly issued liabilities,

(c)an injection of own funds, or purchase of capital instruments, at prices and on terms that do not confer an advantage upon the bank, where none of the circumstances referred to in subsection (5C)(a), (b), (c) or (d) are present at the time the public support is granted and none of Cases 1 to 4 in section 6A apply.

(5F)Before determining that Condition 1 is met, the PRA must consult the Bank of England.

(5G)Before determining whether or not Condition 2 is met, the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(5H)Before determining that Conditions 3 and 4 are met, the Bank must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.]

(6)The special resolution objectives are not relevant to Conditions 1 and 2.

(7)The conditions for applying for and making a bank insolvency order are set out in sections 96 and 97.

(8)The conditions for applying for and making a bank administration order are set out in sections 143 and 144.

Textual Amendments

F110S. 7(1)-(5H) substituted for s. 7(1)-(5) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 12

F111Words in s. 7(5C)(b) substituted (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 7(a)

F112Words in s. 7(5C)(d) substituted (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 7(b)

Commencement Information

I10S. 7 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F1147A.Effect on other group members, financial stability in [F115UK] etcU.K.

(1)Where the Bank of England is considering the imposition of a requirement under section 3A(2), [F116(4), (4B)(b),] (5) or (6), the Bank must consult the PRA and the FCA, and have regard to the potential impact of the requirement on—

(a)the institution in question,

(b)the market for financial services within the [F117United Kingdom], and

(c)the financial stability of the [F118United Kingdom].

[F119(1A)Subsection (1) does not apply in relation to a requirement under section 3A(4) for a person to maintain (but not issue) a particular kind of bail-in liability.]

(2)Where the Bank of England is considering the exercise of a stabilisation power in respect of a bank which is a member of a group, the Bank must have regard to—

(a)the need to minimise the effect of the exercise of the power on other undertakings in the same group,

(b)the need to minimise any adverse effects on the financial stability of the [F120United Kingdom], and

(c)the potential effect of the exercise of the power on the financial stability of [F121countries other than the United Kingdom] (particularly those F122... countries in which any member of that group is operating).

(3)In this section “group” has the meaning given by section 474 of the Companies Act 2006.]

Textual Amendments

[F1238Specific Condition: private sector purchaser, bridge bank or asset management vehicleU.K.

(1)In a financial assistance case, the Bank may exercise a stabilisation power in respect of the bank concerned in accordance with section 11(2), 12(2) or 12ZA(3) only with the approval of the Treasury.

(2)“Financial assistance case” means a case where the Treasury notify the Bank of England that they have provided financial assistance in respect of a bank for the purpose of resolving or reducing a serious threat to the stability of the financial systems of the United Kingdom.

(3)The condition in this section is in addition to the conditions in sections 7 and 8ZA.]

Textual Amendments

[F1248ZA.Specific conditions: asset management vehicleU.K.

(1)The Bank of England may exercise a stabilisation power in respect of a bank in accordance with section 12ZA(3) only if satisfied that Conditions A and B are met.

(2)Condition A is that the power is exercised in connection with the exercise of one or more stabilisation powers in respect of the bank, or a company which is a banking group company in relation to the bank, otherwise than for the purposes of the third stabilisation option.

(3)Condition B is that the Bank of England is satisfied that—

(a)the situation of the market for the assets which it is proposed to transfer by the exercise of the stabilisation power is of such a nature that the liquidation of those assets under normal insolvency proceedings could have an adverse effect on one or more financial markets,

(b)the transfer is necessary to ensure the proper functioning of the bank or bridge bank from which the transfer is to be made, or

(c)the transfer is necessary to maximise the proceeds available for distribution.

(4)Before determining whether Conditions A and B are met, and if so how to react, the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

F125(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)The conditions in this section are in addition to the conditions in sections 7 and 8.]

Textual Amendments

F1268ASpecific condition: bail-inU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

9Specific conditions: temporary public ownershipU.K.

(1)The Treasury may exercise a stabilisation power in respect of a bank in accordance with section 13(2) only if satisfied that one of the following conditions is met.

(2)Condition A is that the exercise of the power is necessary to resolve or reduce a serious threat to the stability of the financial systems of the United Kingdom.

(3)Condition B is that exercise of the power is necessary to protect the public interest, where the Treasury have provided financial assistance in respect of the bank for the purpose of resolving or reducing a serious threat to the stability of the financial systems of the United Kingdom [F127or the Bank of England has provided extraordinary public financial support in respect of the bank].

(4)Before determining whether a condition is met the Treasury must consult—

[F128(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

(5)The conditions in this section are in addition to the conditions in section 7.

Textual Amendments

F128S. 9(4)(a)(aa) substituted for s. 9(4)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 10 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I11S. 9 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

10Banking Liaison PanelU.K.

(1)The Treasury shall make arrangements for a panel to advise the Treasury about the effect of the special resolution regime on—

(a)banks,

(b)persons with whom banks do business, and

(c)the financial markets.

(2)In particular, the panel may advise the Treasury about—

(a)the exercise of powers to make statutory instruments under or by virtue of this Part, Part 2 or Part 3 (excluding the stabilisation powers, compensation scheme orders, resolution fund orders, third party compensation orders and orders under section 75(2)(b) and (c)),

(b)the code of practice under section 5, and

(c)anything else referred to the panel by the Treasury.

(3)The Treasury shall ensure that the panel includes—

(a)a member appointed by the Treasury,

(b)a member appointed by the Bank of England,

[F129(c)a member appointed by the PRA,

(ca)a member appointed by the FCA,]

(d)a member appointed by the scheme manager of the Financial Services Compensation Scheme,

(e)one or more persons who in the Treasury's opinion represent the interests of banks,

(f)one or more persons who in the Treasury's opinion have expertise in law relating to the financial systems of the United Kingdom, and

(g)one or more persons who in the Treasury's opinion have expertise in insolvency law and practice.

Textual Amendments

F129S. 10(3)(c)(ca) substituted for s. 10(3)(c) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 11 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I12S. 10 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I13S. 10 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

The stabilisation optionsU.K.

11Private sector purchaserU.K.

(1)The first stabilisation option is to sell all or part of the business of the bank to a commercial purchaser.

(2)For that purpose the Bank of England may make—

(a)one or more share transfer instruments;

(b)one or more property transfer instruments.

Commencement Information

I14S. 11 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F13011APrivate sector purchaser: marketingU.K.

(1)Subject to subsection (4), the Bank of England must make arrangements for marketing—

(a)any securities issued by the bank which the Bank intends to transfer by a share transfer instrument under section 11(2)(a), or

(b)any property, rights or liabilities of the bank which the Bank intends to transfer by a property transfer instrument under section 11(2)(b).

(2)The arrangements under subsection (1) must—

(a)be as transparent as possible having regard to the circumstances and the need to maintain financial stability;

(b)ensure there is no conflict of interest;

(c)take account of the need for the Bank to act quickly to address the situation where a bank is failing or likely to fail;

(d)aim at maximising, as far as possible, the sale price for the securities or property, rights or liabilities involved.

(3)The arrangements under subsection (1) must not—

(a)materially misrepresent the securities or property, rights or liabilities which the Bank intends to transfer;

(b)favour or discriminate between potential purchasers or grant an unfair advantage to a potential purchaser.

(4)Subsection (1) does not apply if the Bank of England considers that complying with that subsection would undermine one or more of the special resolution objectives.

(5)In particular subsection (1) does not apply if the Bank considers that—

(a)there is a material threat to financial stability in the United Kingdom F131... arising from or aggravated by the failure or likely failure of the bank, and

(b)complying with subsection (1) would undermine the effectiveness of the first stabilisation option in addressing that threat or achieving the objective in section 4(4).

(7)Any public disclosure of the marketing which may be required under Article 17(1) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse may be delayed in accordance with Article 17(4) or (5) of that Regulation.

[F132(8)The reference in subsection (7) to Regulation (EU) No 596/2014 is to that Regulation as it [F133forms part of [F134assimilated] law].]]

Textual Amendments

12Bridge bankU.K.

(1)The second stabilisation option is to transfer all or part of the business of the bank to a company which [F135meets the requirements of subsection (1A)] (a “bridge bank”).

[F136(1A)Those requirements are that the company—

(a)is wholly or partially owned by the Bank of England,

(b)is controlled by the Bank, and

(c)is created for the purposes of receiving a transfer by virtue of this section with a view to maintaining access to critical functions and (in due course) selling the bank or its business.

(2)For the purpose of subsection (1) the Bank of England may make—

(a)one or more share transfer instruments;

(b)one or more property transfer instruments.]

(3)The code of practice under section 5 must include provision about the management and control of bridge banks including, in particular, provision about—

(a)setting objectives,

(b)the content of the articles of association,

(c)the content of reports under section 80(1),

(d)different arrangements for management and control at different stages, and

(e)eventual disposal.

[F137(3A)Where—

(a)all or substantially all of the bridge bank’s assets, rights and liabilities have been transferred to a third party, or

(b)following a transfer to the bridge bank under this section, no further transfer to the bridge bank is made under this section during the relevant post-transfer period,

the Bank of England must, without delay, take all necessary steps to wind up the bridge bank.

(3B)But subsection (3A)(b) does not apply if the bridge bank—

(a)has merged with another entity,

(b)has ceased to meet the requirements of subsection (1A)(a) or (b), or

(c)has already been wound up.

(3C)“The relevant post-transfer period” means the period of two years beginning with the day of the transfer mentioned in subsection (3A)(a), subject to any extension under subsection (3D).

(3D)The Bank of England may extend (or further extend) the relevant post-transfer period by one year if it is satisfied that the extension—

(a)would support one or more of the outcomes mentioned in subsection (3A)(a) or (3B)(a), (b) or (c), or

(b)is necessary to ensure the continuity of essential banking or financial services.]

(4)Where property, rights or liabilities are first transferred by property transfer instrument to a bridge bank and later transferred (whether or not by the exercise of a power under this Part) to another company which [F138meets the requirements of subsection (1A)], that other company is an “onward bridge bank”.

(5)An onward bridge bank—

(a)is a bridge bank for the purposes of—

[F139(i)subsections (3) to (3B),

(ia)section 8ZA(3)(b),

(ib)section 12ZA(1)(b) and (2)(c),]

(ii)section 77,

(iii)section 79, and

(iv)section 80(5), but

(b)is not a bridge bank for the purposes of—

(i)section 30(1),

(ii)section 43(1), or

(iii)section 80(1).

Textual Amendments

F136S. 12(1A)(2) substituted for s. 12(2) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 18(3)

F139S. 12(5)(a)(i)-(ib) substituted for s. 12(5)(a)(i) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 18(6)

Commencement Information

I15S. 12 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I16S. 12 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F14012ZA.Asset management vehicleU.K.

(1)The third stabilisation option is to transfer all or part of the business of—

(a)the bank, or

(b)a bridge bank to which shares or property, rights or liabilities of the bank have been transferred under section 12,

to an asset management vehicle.

(2)An “asset management vehicle” is an undertaking which—

(a)is wholly or partially owned (directly or indirectly) by the Bank of England or the Treasury,

(b)is controlled by the Bank of England, and

(c)is created for the purpose of receiving some or all of the assets, rights and liabilities of one or more banks or of one or more bridge banks (or both).

(3)For the purpose of subsection (1) the Bank of England may make one or more property transfer instruments.

(4)An asset management vehicle must manage the assets transferred to it with a view to maximising their value through eventual sale or orderly wind down.

(5)The code of practice under section 5 must include provision about the management and control of asset management vehicles including, in particular, provision about—

(a)setting objectives,

(b)the content of the articles of association,

(c)the content of reports under section 80(1),

(d)different arrangements for management and control at different stages, and

(e)eventual disposal.

(6)Where property, rights or liabilities are transferred to an asset management vehicle pursuant to the third stabilisation option, the Bank of England may make one or more supplemental property transfer instruments transferring any of that property, or those rights or liabilities, to one or more other asset management vehicles.]

Textual Amendments

[F14112ABail-in optionU.K.

(1)The [F142fourth] stabilisation option is exercised by the use of the power in subsection (2).

[F143(2)The Bank of England may make one or more resolution instruments.

(2A)A resolution instrument may contain provision or proposals of any kind mentioned in subsections (3) to (6).

(2B)The power in subsection (2) must be exercised in accordance with section 12AA.

(2C)When the Bank of England exercise that power, at least one resolution instrument must include provision under section 48H(1) (business reorganisation plan).]

(3)A resolution instrument may—

(a)make special bail-in provision with respect to a specified bank;

(b)make other provision for the purposes of, or in connection with, any special bail-in provision made by that or another instrument.

(4)A resolution instrument may—

(a)provide for securities issued by a specified bank to be transferred to a [F144resolution administrator (see section 62B)] or another person;

(b)make other provision for the purposes of, or in connection with, the transfer of securities issued by a specified bank (whether or not the transfer has been or is to be effected by that instrument, by another resolution instrument or otherwise).

(5)A resolution instrument may set out proposals with regard to the future ownership of a specified bank or of the business of a specified bank, and any other proposals (for example, proposals about making special bail-in provision) that the Bank of England may think appropriate.

(6)A resolution instrument may make any other provision the Bank of England may think it appropriate to make in exercise of specific powers under this Part.

(7)Provision made in accordance with subsection (4) may relate to—

(a)specified securities, or

(b)securities of a specified description.

(8)Where the Bank of England has exercised the power in subsection (4) to transfer securities to a [F145resolution administrator], the Bank of England must exercise its functions under this Part (see, in particular, section 48V) with a view to ensuring that any securities held by a person in the capacity of a [F145resolution administrator] are so held only for so long as is, in the Bank of England's opinion, appropriate having regard to the special resolution objectives.

(9)References in this Part to “special bail-in provision” are to provision made in reliance on section 48B.]

Textual Amendments

F143Ss. 12A(2)-(2C) substituted for s. 12A(2) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 20(3)

[F14612AA.Bail-in: sequence of write-down and conversion of capital instruments and liabilitiesU.K.

(1)When the Bank of England exercises the fourth stabilisation option, it must use the powers conferred by sections 12A, 48B to 48W and 48Z and this section in a way which ensures that—

(a)existing Common Equity Tier 1 instruments of the bank are cancelled, transferred or diluted in accordance with the principle that losses should be borne first by the holders of such instruments,

(b)the principal amount of Additional Tier 1 instruments is reduced or converted (directly or indirectly) into Common Equity Tier 1 instruments (or both), to the extent of the capacity of the Additional Tier 1 instruments,

(c)the principal amount of Tier 2 instruments is reduced or converted (directly or indirectly) into Common Equity Tier 1 instruments (or both), to the extent of the capacity of the Tier 2 instruments,

(d)where the total of any reduction or conversion pursuant to paragraphs (b) and (c) is less than the shortfall amount, the principal amount of subordinated debt that is not within either of those paragraphs is—

(i)reduced or converted (directly or indirectly) into shares or other securities, or both reduced and so converted, in accordance with the hierarchy of claims in normal insolvency proceedings, by the difference or to the extent of the capacity of those instruments, whichever is lower, and

(ii)losses are born by the holders of shares of the bank that are not within paragraph (a), (b) or (c) in accordance with the hierarchy of claims in normal insolvency proceedings,

(e)where the total of any reduction or conversion pursuant to paragraphs (b), (c) and (d), and any reduction or conversion pursuant to subsection (6), is less than the shortfall amount, the principal amount of, or outstanding amount payable in respect of, the remaining [F147bail-in] liabilities is reduced or converted (directly or indirectly) into shares or other securities, or both reduced and so converted, in accordance with the hierarchy of claims in normal insolvency proceedings, by the difference or to the extent of their capacity, whichever is lower.

(2)In this section—

  • F148...

  • “the shortfall amount” means the sum of the amounts referred to in Article 47.3(b) and (c) of the resolution and recovery directive.

(3)Subsections (1) to (4) of section 6C apply for the purpose of this section as if references in those subsections to section 6B were references to subsection (1)(a) to (c) of this section.

(4)When complying with subsection (1)(d) and (e), the Bank of England must allocate the losses represented by the shortfall amount equally between [F149bail-in] liabilities of the same rank by reducing the principal amount of, or outstanding amount payable in respect of, those [F149bail-in] liabilities to the same extent in proportion to their value, except where a different allocation of losses amongst liabilities of the same rank is allowed by virtue of section 48B(10) and (11).

(5)Subsection (4) does not prevent excluded liabilities (as defined by section 48B(7A)) from receiving more favourable treatment than [F150bail-in] liabilities which are of the same rank in normal insolvency proceedings.

(6)The Bank may take the action required by subsection (1)(e) only if it converts or reduces the principal amount of any instruments referred to in subsection (1)(d) which contain—

(a)terms that provide for the principal amount of the instrument to be reduced on the occurrence of any event that refers to the financial situation, solvency or levels of own funds of the bank, or

(b)terms that provide for the conversion of the instruments to shares on the occurrence of any such event,

in accordance with those terms.

(7)Where the principal amount of an instrument has been reduced, but not to zero, in accordance with terms of the kind referred to in subsection (6)(a) before the application of the bail-in option, the Bank must take the action required by subsection (1) in relation to the residual amount of that principal.

(8)When taking the action required by subsection (1), the Bank must not convert or reduce one class of liabilities while a class of liabilities that is subordinated to that class remains substantially unconverted or the principal amount of those liabilities is not reduced to nil.

(9)For the purpose of subsection (8), excluded liabilities within the meaning of section 48B(7A) are to be ignored.

(10)For the purposes of this section “existing” Common Equity Tier 1 instruments includes Common Equity Tier 1 instruments issued or conferred in the following circumstances—

(a)pursuant to conversion of debt instruments to Common Equity Tier 1 instruments in accordance with contractual terms of the original debt instruments on the occurrence of an event that preceded, or occurred at the same time as, the assessment by the Bank of England that the bank met the conditions in section 7;

(b)pursuant to any previous conversion of relevant capital instruments to Common Equity Tier 1 instruments in accordance with section 6B.]

Textual Amendments

F15112BBail-in administratorsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

13Temporary public ownershipU.K.

(1)The [F152fifth] stabilisation option is to take the bank into temporary public ownership.

(2)For that purpose the Treasury may make one or more share transfer orders in which the transferee is—

(a)a nominee of the Treasury, or

(b)a company wholly owned by the Treasury.

(3)The code of practice under section 5 must include provision about the management of banks taken into temporary public ownership under this section.

Textual Amendments

Commencement Information

I17S. 13 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I18S. 13 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

Transfer of securitiesU.K.

14Interpretation: “securities”U.K.

(1)In this Part “securities” includes anything falling within any of the following classes.

(2)Class 1: shares and stock.

(3)Class 2: debentures, including—

(a)debenture stock,

(b)loan stock,

(c)bonds,

(d)certificates of deposit, and

(e)any other instrument creating or acknowledging a debt.

(4)Class 3: warrants or other instruments that entitle the holder to acquire anything in Class 1 or 2.

(5)Class 4: rights which—

(a)are granted by a deposit-taker, and

(b)form part of the deposit-taker's own funds for the purposes of [F153Title 1 of Part 2 of [F154the capital requirements regulation].]

Textual Amendments

Commencement Information

I19S. 14 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

15Share transfer instrumentU.K.

(1)A share transfer instrument is an instrument which—

(a)provides for securities issued by a specified bank to be transferred;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by a specified bank (whether or not the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

(2)A share transfer instrument may relate to—

(a)specified securities, or

(b)securities of a specified description.

Commencement Information

I20S. 15 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

16Share transfer orderU.K.

(1)A share transfer order is an order which—

(a)provides for securities issued by a specified bank to be transferred;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by a specified bank (whether or not the transfer has been or is to be effected by that order, by another share transfer order or otherwise).

(2)A share transfer order may relate to—

(a)specified securities, or

(b)securities of a specified description.

Commencement Information

I21S. 16 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I22S. 16 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

17EffectU.K.

(1)In this section “transfer” means a transfer provided for by a share transfer instrument or order[F155, by a mandatory reduction instrument] [F156or by a resolution instrument].

(2)A transfer takes effect by virtue of the instrument or order (and in accordance with its provisions as to timing or other ancillary matters).

(3)A transfer takes effect despite any restriction arising by virtue of contract or legislation or in any other way.

(4)In subsection (3) “restriction” includes—

(a)any restriction, inability or incapacity affecting what can and cannot be assigned or transferred (whether generally or by a particular person), and

(b)a requirement for consent (by any name).

(5)A share transfer instrument or order[F157, a mandatory reduction instrument] [F158or a resolution instrument] may provide for a transfer to take effect free from any trust, liability or other encumbrance (and may include provision about their extinguishment).

(6)A share transfer instrument or order[F159, a mandatory reduction instrument] [F160or a resolution instrument] may extinguish rights to acquire securities falling within Class 1 or 2 in section 14.

Textual Amendments

Commencement Information

I23S. 17 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I24S. 17 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

18ContinuityU.K.

(1)A share transfer instrument or order may provide for a transferee to be treated for any purpose connected with the transfer as the same person as the transferor.

(2)A share transfer instrument or order may provide for agreements made or other things done by or in relation to a transferor to be treated as made or done by or in relation to the transferee.

(3)A share transfer instrument or order may provide for anything (including legal proceedings) that relates to anything transferred and is in the process of being done by or in relation to the transferor immediately before the transfer date, to be continued by or in relation to the transferee.

(4)A share transfer instrument or order may modify references (express or implied) in an instrument or document to a transferor.

(5)A share transfer instrument or order may require or permit—

(a)a transferor to provide a transferee with information and assistance;

(b)a transferee to provide a transferor with information and assistance.

[F161(5A)This section applies to a mandatory reduction instrument as it applies to a share transfer instrument; and in relation to a mandatory reduction instrument references in this section to a “transfer” are to a transfer of securities (whether made by that or another mandatory reduction instrument) and “transferor” and “transferee” are to be read accordingly.]

[F162(6)This section applies to a resolution instrument as it applies to a share transfer instrument; and in relation to a resolution instrument references in this section to a “transfer” are to a transfer of securities (whether made by that or another resolution instrument) and “transferor” and “transferee” are to be read accordingly.]

Textual Amendments

Commencement Information

I25S. 18 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I26S. 18 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

19Conversion and delistingU.K.

(1)A share transfer instrument or order may provide for securities to be converted from one form or class to another.

(2)A share transfer instrument or order may provide for the listing of securities, under section 74 of the Financial Services and Markets Act 2000, to be discontinued [F163or suspended].

[F164(3)Where the listing of securities is suspended in accordance with a share transfer instrument or order, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, the Financial Services and Markets Act 2000 as still being listed.]

Textual Amendments

Commencement Information

I27S. 19 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I28S. 19 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

20Directors [F165and senior managers] U.K.

(1)A share transfer instrument may enable the Bank of England—

(a)to remove a director [F166or senior manager] of a specified bank;

(b)to vary the service contract of a director [F166or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F166or senior manager] of a specified bank;

(d)to appoint a director [F166or senior manager] of a specified bank.

[F167(1A)Subsection (1) also applies to a director [F168or senior manager] of any undertaking which is a banking group company in respect of a specified bank.]

(2)A share transfer order may enable the Treasury—

(a)to remove a director [F169or senior manager] of a specified bank;

(b)to vary the service contract of a director [F169or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F169or senior manager] of a specified bank;

(d)to appoint a director [F169or senior manager] of a specified bank.

(3)Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.

(4)Appointments under subsection (2)(d) are to be on terms and conditions agreed with the Treasury.

[F170(5)In this section “senior manager” means a person who—

(a)exercises executive functions within a specified bank or banking group company, and

(b)is responsible, and directly accountable to the directors, for the day to day management of that bank or banking group company.]

Textual Amendments

Commencement Information

I29S. 20 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I30S. 20 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

21Ancillary instruments: production, registration, &c.U.K.

(1)A share transfer instrument or order may permit or require the execution, issue or delivery of an instrument.

(2)A share transfer instrument or order may provide for a transfer to have effect irrespective of—

(a)whether an instrument has been produced, delivered, transferred or otherwise dealt with;

(b)registration.

(3)A share transfer instrument or order may provide for the effect of an instrument executed, issued or delivered in accordance with the instrument or order.

(4)A share transfer instrument or order may modify or annul the effect of an instrument.

(5)A share transfer instrument or order may—

(a)entitle a transferee to be registered in respect of transferred securities;

(b)require a person to effect registration.

Commencement Information

I31S. 21 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I32S. 21 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

F17122Termination rights, &c.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

23Incidental provisionU.K.

(1)A share transfer instrument or order may include incidental, consequential or transitional provision.

(2)In relying on subsection (1) a share transfer instrument or order—

(a)may make provision generally or only for specified purposes, cases or circumstances, and

(b)may make different provision for different purposes, cases or circumstances.

Commencement Information

I33S. 23 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I34S. 23 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

24Procedure: instrumentsU.K.

(1)As soon as is reasonably practicable after making a share transfer instrument in respect of a bank the Bank of England shall send a copy to—

(a)the bank,

(b)the Treasury,

[F172(c)the PRA,

(ca)the FCA, and]

(d)any other person specified in the code of practice under section 5.

(2)As soon as is reasonably practicable after making a share transfer instrument the Bank of England shall publish a copy—

(a)on the Bank's internet website, F173...

(b)in two newspapers, chosen by the Bank of England to maximise the likelihood of the instrument coming to the attention of persons likely to be affected[F174, and

(c)if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),

and arrange for the publication of a copy on the internet website of the bank in respect of which the instrument was made.]

(3)Where the Treasury receive a copy of a share transfer instrument under subsection (1) they shall lay a copy before Parliament.

Textual Amendments

F172S. 24(1)(c)(ca) substituted for s. 24(1)(c) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 12 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F173Word in s. 24(2) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 29

Commencement Information

I35S. 24 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I36S. 24 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

25Procedure: ordersU.K.

(1)A share transfer order—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(2)As soon as is reasonably practicable after making a share transfer order in respect of a bank the Treasury shall send a copy to—

(a)the bank,

(b)the Bank of England,

[F175(c)the PRA,

(ca)the FCA, and]

(d)any other person specified in the code of practice under section 5.

(3)As soon as is reasonably practicable after making a share transfer order the Treasury shall publish a copy—

(a)on the Treasury's internet website, F176...

(b)in two newspapers, chosen by the Treasury to maximise the likelihood of the instrument coming to the attention of persons likely to be affected[F177, and

(c)if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),

and arrange for the publication of a copy on the internet website of the bank in respect of which the order was made.]

Textual Amendments

F175S. 25(2)(c)(ca) substituted for s. 25(2)(c) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 13 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F176Word in s. 25(3) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 30

Commencement Information

I37S. 25 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I38S. 25 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

26Supplemental instrumentsU.K.

(1)This section applies where the Bank of England has made a share transfer instrument in accordance with section 11(2) [F178or 12(2)] (“the original instrument”).

(2)The Bank of England may make one or more supplemental share transfer instruments.

(3)A supplemental share transfer instrument is a share transfer instrument which—

(a)provides for the transfer of securities which were issued by the bank before the original instrument and have not been transferred by the original instrument or another supplemental share transfer instrument;

(a)makes provision of a kind that a share transfer instrument may make under section 15(1)(b) (whether or not in connection with a transfer under the original instrument).

(4)Sections 7 and 8 do not apply to a supplemental share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(5)Before making a supplemental share transfer instrument the Bank of England must consult—

[F179(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(6)The possibility of making a supplemental share transfer instrument in reliance on subsection (2) is without prejudice to the possibility of making of a new instrument in accordance with section 11(2) [F180or 12(2)] (and not in reliance on subsection (2) above).

Textual Amendments

F179S. 26(5)(a)(aa) substituted for s. 26(5)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 14 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I39S. 26 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F18126ZAOnward share transfer instrumentsU.K.

(1)This section applies where the Bank of England has made a share transfer instrument, in respect of securities issued by a bank, in accordance with section 12(2) (“the original instrument”).

(2)The Bank of England may make one or more onward share transfer instruments.

(3)An onward share transfer instrument is a share transfer instrument which—

(a)provides for the transfer of—

(i)securities which were issued by the bank before the original instrument and have been transferred by the original instrument or a supplemental share transfer instrument, or

(ii)securities which were issued by the bank after the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

(4)An onward share transfer instrument may not transfer securities to the transferor under the original instrument.

(5)Sections 7 and 8 do not apply to an onward share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(6)Before making an onward share transfer instrument the Bank must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)Section 26 applies where the Bank of England has made an onward share transfer instrument.]

Textual Amendments

[F18326A F182... reverse share transfer [F184instruments] U.K.

(1)This section applies where the Bank of England has made a share transfer instrument in accordance with section 11(2) (“the original instrument”) [F185or 12(2)] providing for the transfer of securities issued by a bank to a person (“the original transferee”).

(2)The Bank of England may make one or more F186... reverse share transfer instruments in respect of securities issued by the bank and held by the original transferee.

[F187(2A)If the Bank of England makes an onward share transfer instrument in respect of securities transferred by the original instrument, the Bank may make one or more reverse share transfer instruments in respect of securities issued by the bank and held by a transferee under the onward share transfer instrument (“the onward transferee”).]

(3)A F186... reverse share transfer instrument is a share transfer instrument which—

(a)provides for transfer to the transferor under the original instrument [F188(where subsection (2) applies)];

[F189(ab)provides for transfer to the original transferee (where subsection (2A) applies);]

(b)makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a) [F190or (ab)].

(4)The Bank of England must not make a F186... reverse share transfer instrument [F191under subsection (2)] without the written consent of the original transferee.

[F192(4A)The Bank of England must not make a reverse share transfer instrument under subsection (2A) unless—

(a)the onward transferee is—

(i)a company wholly owned by the Bank of England,

(ii)a company wholly owned by the Treasury, or

(iii)a nominee of the Bank of England or the Treasury, or

(b)the reverse share transfer instrument is made with the written consent of the onward transferee.]

(5)Sections 7, 8 and 50 do not apply to a F186... reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(6)Before making a F186... reverse share transfer instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)Section 26 applies where the Bank of England has made a F186... reverse share transfer instrument.]

Textual Amendments

F182Words in s. 26A heading omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 10(1)(g)(i)

F186Words in s. 26A(2)-(7) omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 10(1)(b)

27Supplemental ordersU.K.

(1)This section applies where the Treasury have made a share transfer order, in respect of securities issued by a bank, in accordance with section 13(2) (“the original order”).

(2)The Treasury may make one or more supplemental share transfer orders.

(3)A supplemental share transfer order is a share transfer order which—

(a)provides for the transfer of securities which were issued by the bank before the original order and have not been transferred by the original order or another supplemental share transfer order;

(b)makes provision of a kind that a share transfer order may make under section 16(1)(b), whether in connection with a transfer under the original order or in connection with a transfer under that or another supplemental order.

(4)Sections 7 and 9 do not apply to a supplemental share transfer order (but it is to be treated in the same way as any other share transfer order for all other purposes, including for the purposes of the application of a power under this Part).

(5)Before making a supplemental share transfer order the Treasury must consult—

[F193(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

(6)The possibility of making a supplemental share transfer order in reliance on subsection (2) is without prejudice to the possibility of making of a new order in accordance with section 13(2) (and not in reliance on subsection (2) above).

Textual Amendments

F193S. 27(5)(a)(aa) substituted for s. 27(5)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 15 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I40S. 27 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I41S. 27 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

28Onward transferU.K.

(1)This section applies where the Treasury have made a share transfer order, in respect of securities issued by a bank, in accordance with section 13(2) (“the original order”).

(2)The Treasury may make one or more onward share transfer orders.

(3)An onward share transfer order is a share transfer order which—

(a)provides for the transfer of—

(i)securities which were issued by the bank before the original order and have been transferred by the original order or a supplemental share transfer order, or

(ii)securities which were issued by the bank after the original order;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that order, by another share transfer order or otherwise).

(4)An onward share transfer order may not transfer securities to the transferor under the original order.

(5)Sections 7 and 9 do not apply to an onward share transfer order (but it is to be treated in the same way as any other share transfer order for all other purposes, including for the purposes of the application of a power under this Part).

(6)Before making an onward share transfer order the Treasury must consult—

[F194(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

(7)Section 27 applies where the Treasury have made an onward share transfer order.

Textual Amendments

F194S. 28(6)(a)(aa) substituted for s. 28(6)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 16 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I42S. 28 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I43S. 28 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

29Reverse share transfer [F195orders] U.K.

(1)This section applies where the Treasury have made a share transfer order in accordance with section 13(2) (“the original order”) providing for the transfer of securities issued by a bank to a person (“the original transferee”).

(2)The Treasury may make one or more reverse share transfer orders in respect of securities issued by the bank and held by the original transferee (whether or not they were transferred by the original order).

(3)If the Treasury makes an onward share transfer order in respect of securities transferred by the original order, the Treasury may make one or more reverse share transfer orders in respect of [F196securities issued by the bank and held by a transferee under the onward share transfer order (“the onward transferee”).]

(4)A reverse share transfer order is a share transfer order which—

(a)provides for transfer to the transferor under the original order (where subsection (2) applies);

(b)provides for transfer to the original transferee (where subsection (3) applies);

(c)makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a) or (b).

[F197(4A)The Treasury must not make a reverse share transfer order under subsection (3) unless—

(a)the onward transferee is—

(i)a company wholly owned by the Bank of England,

(ii)a company wholly owned by the Treasury, or

(iii)a nominee of the Treasury, or

(b)the reverse share transfer order is made with the written consent of the onward transferee.]

(5)Sections 7, 9 and 51 do not apply to a reverse share transfer order (but it is to be treated in the same way as any other share transfer order for all other purposes including for the purposes of the application of a power under this Part).

(6)Before making a reverse share transfer order the Treasury must consult—

[F198(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

(7)Section 27 applies where the Treasury have made a reverse share transfer order.

Textual Amendments

F196Words in s. 29(3) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 97(3)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F198S. 29(6)(a)(aa) substituted for s. 29(6)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 17 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I44S. 29 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I45S. 29 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F19929A.Interpretation: “resolution company”U.K.

In this Act “resolution company” means a bridge bank or an asset management vehicle.]

Textual Amendments

30 [F200Resolution company:] share transfersU.K.

[F201(1)This section applies where the Bank of England has made—

(a)a property transfer instrument in respect of a resolution company in accordance with section 12(2) or 12ZA(3), or

(b)a share transfer instrument in respect of a resolution company in accordance with section 12(2).]

(2)The Bank of England may make one or more [F202resolution company] share transfer instruments.

(3)A [F202resolution company] share transfer instrument is a share transfer instrument which—

(a)provides for securities issued by the [F202resolution company] to be transferred;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by the [F202resolution company] (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

(4)Sections 7 and 8 do not apply to a [F202resolution company] share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(5)Before making a [F202resolution company] share transfer instrument the Bank of England must consult—

[F203(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(6)Section 26 applies where the Bank of England has made a [F202resolution company] share transfer instrument.

Textual Amendments

F200Words in s. 30 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 33(4)

F203S. 30(5)(a)(aa) substituted for s. 30(5)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 18 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I46S. 30 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

31 [F204Resolution company:] reverse share transferU.K.

(1)This section applies where the Bank of England has made a [F205resolution company] share transfer instrument in accordance with section 30(2) (“the original instrument”) F206...

(2)The Bank of England may make one or more [F205resolution company] reverse share transfer instruments in respect of securities issued by the [F205resolution company] and held by a [F207transferee under the original instrument].

(3)A [F205resolution company] reverse share transfer instrument is a share transfer instrument which—

(a)provides for transfer to the transferor under the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a).

[F208(3A)The Bank of England must not make a [F205resolution company] reverse share transfer instrument unless—

(a)the transferee under the original instrument is—

(i)a company wholly owned by the Bank of England,

(ii)a company wholly owned by the Treasury, or

(iii)a nominee of the Treasury, or

(b)the [F205resolution company] reverse share transfer instrument is made with the written consent of the transferee under the original instrument.]

(4)Sections 7, 8 and 51 do not apply to a [F205resolution company] reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(5)Before making a [F205resolution company] reverse share transfer instrument the Bank of England must consult—

[F209(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(6)Section 26 applies where the Bank of England has made a [F205resolution company] reverse share transfer instrument.

Textual Amendments

F204Words in s. 31 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 34(3)

F206Words in s. 31(1) omitted (1.4.2013) by virtue of Financial Services Act 2012 (c. 21), ss. 97(4)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F207Words in s. 31(2) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 97(4)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F209S. 31(5)(a)(aa) substituted for s. 31(5)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 19 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I47S. 31 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

32Interpretation: generalU.K.

In this group of sections—

  • “service contract” has the meaning given by section 227 of the Companies Act 2006, and

  • “transfer date” means the date or time on or at which a share transfer instrument or order (or the relevant part of it) takes effect.

Commencement Information

I48S. 32 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

Transfer of propertyU.K.

33Property transfer instrumentU.K.

(1)A property transfer instrument is an instrument which—

(a)provides for property, rights or liabilities of a specified bank to be transferred;

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of a specified bank (whether the transfer has been or is to be effected by that instrument, by another property transfer instrument or otherwise).

(2)A property transfer instrument may relate to—

(a)all property, rights and liabilities of the specified bank,

(b)all its property, rights and liabilities subject to specified exceptions,

(c)specified property, rights or liabilities, or

(d)property, rights or liabilities of a specified description.

[F210(3)In this section references to a bank include a resolution company (whether or not it is a bank).]

Textual Amendments

Commencement Information

I49S. 33 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

34EffectU.K.

(1)In this section “transfer” means a transfer provided for by a property transfer instrument.

(2)A transfer takes effect by virtue of the instrument (and in accordance with its provisions as to timing or other ancillary matters).

(3)A transfer takes effect despite any restriction arising by virtue of contract or legislation or in any other way.

(4)In subsection (3) “restriction” includes—

(a)any restriction, inability or incapacity affecting what can and cannot be assigned or transferred (whether generally or by a particular person), and

(b)a requirement for consent (by any name).

(5)A property transfer instrument may provide for a transfer to be conditional upon a specified event or situation—

(a)occurring or arising, or

(b)not occurring or arising.

(6)A property transfer instrument may include provision dealing with the consequences of breach of a condition imposed under subsection (5); and the consequences may include—

(a)automatic vesting in the original transferor;

(b)an obligation to effect a transfer back to the original transferor, with specified consequences for failure to comply (which may include provision conferring a discretion on a court or tribunal);

(c)provision making a transfer or anything done in connection with a transfer void or voidable.

(7)Where a property transfer instrument makes provision in respect of property held on trust (however arising) it may also make provision about—

(a)the terms on which the property is to be held after the instrument takes effect F211..., and

(b)how any powers, provisions and liabilities in respect of the property are to be exercisable or have effect after the instrument takes effect.

[F212(8)Provision under subsection (7)(a) may remove or alter the terms of the trust on which the property is held only to the extent that the Bank of England thinks it necessary or expedient for the purpose of transferring—

(a)the legal or beneficial interest of the transferor in the property;

(b)any powers, rights or obligations of the transferor in respect of the property.

(9)In subsection (8) references to the transferor are references to the transferor under the property transfer instrument.]

Textual Amendments

F211Words in s. 34(7)(a) omitted (1.1.2015) by virtue of Financial Services Act 2012 (c. 21), ss. 98(2), 122(3) (with Sch. 20); S.I. 2014/3323, art. 2

Commencement Information

I50S. 34 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

35Transferable propertyU.K.

(1)A property transfer instrument may transfer any property, rights or liabilities including, in particular—

(a)property, rights and liabilities acquired or arising between the making of the instrument and the transfer date,

(b)rights and liabilities arising on or after the transfer date in respect of matters occurring before that date,

(c)property outside the United Kingdom,

(d)rights and liabilities under the law of a country or territory outside the United Kingdom [F213(including under legislation of the European Union)], and

(e)rights and liabilities under an enactment F214....

(2)Section 32 applies for the interpretation of this section (with the necessary modification).

Textual Amendments

Commencement Information

I51S. 35 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

36ContinuityU.K.

(1)A property transfer instrument may provide—

(a)for a transfer to be, or to be treated as, a succession;

(b)for a transferee to be treated for any purpose connected with the transfer as the same person as the transferor.

(2)A property transfer instrument may provide for agreements made or other things done by or in relation to a transferor to be treated as made or done by or in relation to the transferee.

(3)A property transfer instrument may provide for anything (including legal proceedings) that relates to anything transferred and is in the process of being done by or in relation to the transferor immediately before the transfer date, to be continued by or in relation to the transferee.

(4)A property transfer instrument which transfers or enables the transfer of a contract of employment may include provision about continuity of employment.

(5)A property transfer instrument may modify references (express or implied) in an instrument or document to a transferor.

(6)In so far as rights and liabilities in respect of anything transferred are enforceable after transfer, a property transfer instrument may provide for apportionment between transferor and transferee to a specified extent and in specified ways.

(7)A property transfer instrument may enable the transferor and transferee by agreement to modify a provision of the instrument; but a modification—

(a)must achieve a result that could have been achieved by the instrument, and

(b)may not transfer (or arrange for the transfer of) property, rights or liabilities.

(8)A property transfer instrument may require or permit—

(a)a transferor to provide a transferee with information and assistance;

(b)a transferee to provide a transferor with information and assistance.

(9)Section 32 applies for the interpretation of this section (with the necessary modification).

Commencement Information

I52S. 36 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F21536ADirectors [F216and senior managers] U.K.

(1)A property transfer instrument may enable the Bank of England—

(a)to remove a director [F217or senior manager] of a specified bank;

(b)to vary the service contract of a director [F217or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F217or senior manager] of a specified bank;

(d)to appoint a director [F217or senior manager] of a specified bank.

(2)Subsection (1) also applies to a director [F218or senior manager] of any undertaking which is a banking group company in respect of a specified bank.

(3)Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.

[F219(4)In this section “senior manager” means a person who—

(a)exercises executive functions within a specified bank or banking group company, and

(b)is responsible, and directly accountable to the directors, for the day to day management of that bank or banking group company.

(5)In this section references to a bank include a resolution company (whether or not it is a bank).]]

Textual Amendments

37LicencesU.K.

(1)A licence in respect of anything transferred by property transfer instrument shall continue to have effect despite the transfer.

(2)A property transfer instrument may disapply subsection (1) to a specified extent.

(3)Where a licence imposes rights or obligations, a property transfer instrument may apportion responsibility for exercise or compliance between transferor and transferee.

(4)In this section “licence” includes permission and approval and any other permissive document in respect of anything transferred.

Commencement Information

I53S. 37 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

F22038Termination rights, &c.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

39Foreign propertyU.K.

(1)This section applies where a property transfer instrument transfers foreign property.

(2)In subsection (1) “foreign property” means—

(a)property outside the United Kingdom, and

(b)rights and liabilities under foreign law.

(3)The transferor and the transferee must each take any necessary steps to ensure that the transfer is effective as a matter of foreign law (if it is not wholly effective by virtue of the property transfer instrument).

(4)Until the transfer is effective as a matter of foreign law, the transferor must—

(a)hold the property or right for the benefit of the transferee (together with any additional property or right accruing by virtue of the original property or right), or

(b)discharge the liability on behalf of the transferee.

[F221(4A)If the Bank of England determines that, in spite of any action taken by the transferee or the transferor, it is not possible for the transfer of certain property to be effective under the law of the jurisdiction where the property is located or (where the property consists of rights or liabilities) the law under which it arises—

(a)subsection (4) ceases to apply, and

(b)the provisions of the property transfer instrument relating to that property are void.

(4B)The Bank must give notice of any determination under subsection (4A) to the transferor and the transferee.]

[F222(5)The transferor must meet any expenses of the transferee in complying with this section.]

(6)An obligation imposed by this section is enforceable as if created by contract between the transferor and transferee.

(7)The transferor must comply with any directions of the Bank of England in respect of the obligations under subsections (3) and (4); and—

(a)a direction may disapply subsections (3) and (4) to a specified extent, and

(b)obligations imposed by direction are enforceable as if created by contract between the transferor and the Bank of England.

(8)In this section “foreign law” means the law of a country or territory outside the United Kingdom.

Textual Amendments

Commencement Information

I54S. 39 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F22339ABanks which are [F224recognised central counterparties]U.K.

[F225Paragraphs 59, 60 and 108 of Schedule 11 to the Financial Services and Markets Act 2023] ([F224recognised central counterparty] rules, membership and recognition) apply in relation to a bank which would be a [F226recognised central counterparty] but for [F227paragraph 155(2) of Schedule 11 to that Act] (exclusion of banks etc from definition of [F226recognised central counterparty]) as they apply in relation to a [F226recognised central counterparty].]

Textual Amendments

[F22839B.Property transfer instrument: delistingU.K.

(1)A property transfer instrument may provide for the listing of securities, under section 74 of the Financial Services and Markets Act 2000, to be discontinued or suspended.

(2)Where the listing of securities is suspended in accordance with a property transfer instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, the Financial Services and Markets Act 2000 as still being listed.]

Textual Amendments

40Incidental provisionU.K.

(1)A property transfer instrument may include incidental, consequential or transitional provision.

(2)In relying on subsection (1) an instrument—

(a)may make provision generally or only for specified purposes, cases or circumstances, and

(b)may make different provision for different purposes, cases or circumstances.

Commencement Information

I55S. 40 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

41ProcedureU.K.

(1)As soon as is reasonably practicable after making a property transfer instrument in respect of a bank the Bank of England shall send a copy to—

(a)the bank,

(b)the Treasury,

[F229(c)the PRA,

(ca)the FCA, and]

(d)any other person specified in the code of practice under section 5.

(2)As soon as is reasonably practicable after making a property transfer instrument the Bank of England shall publish a copy—

(a)on the Bank's internet website, F230...

(b)in two newspapers, chosen by the Bank of England to maximise the likelihood of the instrument coming to the attention of persons likely to be affected[F231, and

(c)if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),

and arrange for the publication of a copy on the internet website of the bank in respect of which the instrument was made.]

(3)Where the Treasury receive a copy of a property transfer instrument under subsection (1) they shall lay a copy before Parliament.

[F232(4)In this section references to a “bank” include a resolution company even if it is not a bank.]

Textual Amendments

F229S. 41(1)(c)(ca) substituted for s. 41(1)(c) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 20 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F230Word in s. 41(2) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 40(2)

Commencement Information

I56S. 41 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I57S. 41 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F23341ATransfer of property subsequent to resolution instrumentU.K.

(1)This section applies where the Bank of England has made a resolution instrument.

(2)The Bank of England may make one or more property transfer instruments in respect of property, rights or liabilities of the bank.

(3)[F234Section 7 does] not apply to a property transfer instrument under subsection (2).

(4)Before making a property transfer instrument under subsection (2) the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.]

Textual Amendments

42Supplemental instrumentsU.K.

(1)This section applies where the Bank of England has made a property transfer instrument in accordance with section 11(2) or [F23512(2)[F236, 12ZA(3)] or 41A(2)] (“the original instrument”).

(2)The Bank of England may make one or more supplemental property transfer instruments.

(3)A supplemental property transfer instrument is a property transfer instrument which—

(a)provides for property, rights or liabilities to be transferred from the transferor under the original instrument (whether accruing or arising before or after the original instrument);

(b)makes other provision of a kind that an original property transfer instrument may make under section 33(1)(b) (whether in connection with a transfer under the original instrument or in connection with a transfer under that or another supplemental instrument).

(4)Sections 7[F237, 8 and [F2388ZA]] do not apply to a supplemental property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(5)Before making a supplemental property transfer instrument the Bank of England must consult—

[F239(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(6)The possibility of making a supplemental property transfer instrument in reliance on subsection (2) is without prejudice to the possibility of making of a new instrument in accordance with section 11(2)[F240, 12(2)[F241, 12ZA(3)] or 41A(2)] (and not in reliance on subsection (2) above).

Textual Amendments

F239S. 42(5)(a)(aa) substituted for s. 42(5)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 21 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I58S. 42 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F24242APrivate sector purchaser: reverse property transferU.K.

(1)This section applies where the Bank of England has made a property transfer instrument in accordance with section 11(2) (“the original instrument”) providing for the transfer of property, rights or liabilities of a bank to a person (“the original transferee”).

(2)The Bank of England may make one or more private sector reverse property transfer instruments in respect of property, rights or liabilities of the original transferee.

(3)A private sector reverse property transfer instrument is a property transfer instrument which—

(a)provides for transfer to the transferor under the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities that are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

(4)The Bank of England must not make a private sector reverse property transfer instrument without the written consent of the original transferee.

(5)Sections 7, 8 and 50 do not apply to a private sector reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(6)Before making a private sector reverse property transfer instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)Section 42 applies where the Bank of England has made a private sector reverse property transfer instrument.]

Textual Amendments

43Onward transferU.K.

(1)This section applies where the Bank of England has made a property transfer instrument in respect of a [F243resolution company] in accordance with section 12(2) [F244or 12ZA(3)] (“the original instrument”).

(2)The Bank of England may make one or more onward property transfer instruments.

(3)An onward property transfer instrument is a property transfer instrument which—

(a)provides for property, rights or liabilities of the [F245resolution company] to be transferred (whether accruing or arising before or after the original instrument);

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the [F245resolution company] (whether the transfer has been or is to be effected by that instrument, by another property transfer instrument or otherwise).

(4)An onward property transfer instrument may relate to property, rights or liabilities of the [F246resolution company] whether or not they were transferred under the original instrument.

(5)An onward property transfer instrument may not transfer property, rights or liabilities to the transferor under the original instrument.

(6)Sections 7, 8[F247, 8ZA] and 52 do not apply to an onward property transfer instrument (but for other purposes it is to be treated in the same way as any other property transfer instrument, including for the purposes of the application of a power under this Part).

(7)Before making an onward property transfer instrument the Bank of England must consult—

[F248(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(8)Section 42 applies where the Bank of England has made an onward property transfer instrument.

Textual Amendments

F248S. 43(7)(a)(aa) substituted for s. 43(7)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 22 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I59S. 43 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

44 [F249[F250Resolution company]: reverse] property transferU.K.

(1)This section applies where the Bank of England has made a property transfer instrument in accordance with section 12(2) [F251or 12ZA(3)] (“the original instrument”) providing for the transfer of property, rights or liabilities to a [F252resolution company].

(2)The Bank of England may make one or more [F252resolution company] reverse property transfer instruments in respect of property, rights or liabilities of the [F252resolution company].

(3)If the Bank of England makes an onward property transfer instrument under section 43 the Bank may make one or more [F252resolution company] reverse property transfer instruments in respect of property, rights or liabilities [F253of a transferee under the onward property transfer instrument (“the onward transferee”).]

(4)[F254A [F252resolution company] reverse] property transfer instrument is a property transfer instrument which—

(a)provides for transfer to the transferor under the original instrument (where subsection (2) applies);

(b)provides for transfer to the [F252resolution company] (where subsection (3) applies);

(c)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities that are, could be or could have been transferred under paragraph (a) or (b) (whether the transfer has been or is to be effected by that instrument or otherwise).

[F255(4A)The Bank of England must not make a [F252resolution company] reverse property transfer instrument unless—

(a)the onward transferee is—

(i)a company wholly owned by the Bank of England,

(ii)a company wholly owned by the Treasury, or

(iii)a company wholly owned by a nominee of the Treasury, or

(b)[F256the [F252resolution company] reverse] property transfer instrument is made with the written consent of the onward transferee.]

(5)Sections 7, 8[F257, 8ZA] and 52 do not apply to [F258a [F252resolution company] reverse] property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(6)Before making [F259a [F252resolution company] reverse] property transfer instrument the Bank of England must consult—

[F260(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(7)Section 42 applies where the Bank of England has made [F261a [F252resolution company] reverse] property transfer instrument.

Textual Amendments

F250Words in s. 44 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 44(5)

F253Words in s. 44(3) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 97(6)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F260S. 44(6)(a)(aa) substituted for s. 44(6)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 23 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I60S. 44 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F26244ABail in: reverse property transferU.K.

(1)This section applies where the Bank of England has made a property transfer instrument in accordance with section 41A(2) (“the original instrument”).

(2)The Bank of England may make one or more bail-in reverse property transfer instruments in respect of property, rights or liabilities of the transferee under the original instrument.

(3)A bail-in reverse property transfer instrument is a property transfer instrument which—

(a)provides for a transfer to the transferor under the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, or could be or could have been, transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

(4)The Bank of England may make a bail-in reverse property transfer instrument only with the written consent of the transferee under the original instrument.

(5)[F263Section 7 does] not apply to a bail-in reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(6)Before making a bail-in reverse property transfer instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)Section 42 (supplemental instruments) applies where the Bank of England has made a bail-in reverse property transfer instrument.

Textual Amendments

44BProperty transfer instruments: special bail-in provisionU.K.

[F264(1)A property transfer instrument within subsection (2) may make special bail-in provision with respect to the bank (see section 48B) .

(2)The instruments referred to in subsection (1) are—

(a)a property transfer instrument under section 11(2), 12(2), 12ZA(3) or 41A(2),

(b)a supplemental property transfer instrument under section 42 in relation to which the original instrument is—

(i)a property transfer instrument under section 11(2), 12(2), 12ZA(3) or 41A(2),

(ii)an onward property transfer instrument under section 43(2), or

(iii)a bridge bank supplemental property transfer instrument under section 44D(2),

(c)an onward property transfer instrument under section 43(2), or

(d)a bridge bank supplemental property transfer instrument under section 44D(2).

(3)In the case of—

(a)a property transfer instrument under section 12(2) or 12ZA(3),

(b)a supplemental property transfer instrument under section 42 in relation to which the original instrument is—

(i)a property transfer instrument under section 12(2) or 12ZA(3),

(ii)an onward property transfer instrument under section 43(2), or

(iii)a bridge bank supplemental property transfer instrument under section 44D(2),

(c)an onward property transfer instrument under section 43(2), or

(d)a bridge bank supplemental property transfer instrument under section 44D(2),

the power under subsection (1) to make the provision described in section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes power to make the provision referred to in subsection (3A).

(3A)The provision referred to in subsection (3) is provision replacing a liability (of any form)—

(a)of the bank, in the case of the instruments within subsection (3)(a) and (b)(i),

(b)of the resolution company mentioned in section 43(1), in the case of the instruments within subsections (3)(b)(ii) and (c), or

(c)of the bridge bank mentioned in section 44D(1), in the case of the instruments within subsections (3)(b)(iii) and (d),

with a relevant security (of any form or class).

(3B)The following are relevant securities for the purpose of subsection (3A)—

(a)in any case, a security of the bank,

(b)where the instrument within subsection (3)(a), or the original instrument, is made under section 12, a security of the bridge bank mentioned in section 12(1),

(c)where the instrument within subsection (3)(a), or the original instrument, is made under section 12ZA, a security of the asset management vehicle mentioned in section 12ZA(1).

(3C)In subsection (3B) references to the original instrument are—

(a)in relation to an instrument within subsection (3)(b), the original instrument referred to in that paragraph,

(b)in relation to an instrument within subsection (3)(c), the original instrument as defined in section 43(1),

(c)in relation to an instrument with subsection (3)(d), the original instrument as defined in section 44D(1).]

(4)Where securities of the bridge bank [F265or asset management vehicle] (“B”) are, as a result of subsection (3), held by a person other than the Bank of England, that does not prevent B from being regarded for the purposes of this Part (see particularly section [F26612(1A) and 12ZA(2)]) as being wholly owned by the Bank of England, as long as the Bank of England [F267is entitled to exercise, or control the exercise of, voting rights in respect of] all the ordinary shares issued by B.

Textual Amendments

F264S. 44B(1)-(3C) substituted for s. 44B(1)-(3) (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 11(2)

[F26844BAProperty transfer instruments and special bail-in provision: supplementary mattersU.K.

(1)The following provisions apply in relation to a property transfer instrument which makes special bail-in provision under section 44B(1) as they apply in relation to a resolution instrument—

(a)section 48L (powers in relation to securities) ;

(b)section 48O (power to direct directors of the bank);

(c)section 48Q (continuity);

(d)section 48R (execution and registration of instruments);

(e)section 48S (resolution instruments: general matters);

(f)section 48U (supplemental resolution instruments).

(2)In sections 6E(4)(a)(iii) , 48B, 48X(2)(b)(ii) and 48Y(1)(a) and (2)(a) a reference to a resolution instrument includes a reference to a property transfer instrument which makes special bail-in provision under section 44B(1).

(3)Where special bail-in provision is being made in—

(a)a supplemental property transfer instrument under section 42 in relation to which the original instrument is an onward property transfer instrument under section 43(2), or

(b)an onward property transfer instrument under section 43(2),

references in sections 48B (except in subsection (9)), 48L, 48O and 48U to a bank include a resolution company (whether or not it is a bank).

(4)Where subsection (3) applies, the references in section 48B(3) and (9) to a banking group company, or to a banking group company in relation to a bank, are to a banking group company in relation to the bank in respect of which the Bank of England originally exercised a stabilisation power (and not to a banking group company in relation to the resolution company).]

Textual Amendments

44CReport on special bail-in provisionU.K.

(1)This section applies where the Bank of England makes a property transfer instrument containing provision made in reliance on section 44B.

(2)The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision was made in the case of the liabilities concerned.

(3)If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.

(4)The insolvency treatment principles are that where an instrument includes special bail-in provision—

(a)the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and

(b)any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.

(5)A report must comply with any other requirements as to content that may be specified by the Treasury.

(6)A report must be made as soon as reasonably practicable after the making of the property transfer instrument to which it relates.

(7)The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.]

Textual Amendments

[F26944DBridge bank: supplemental property transfer powersU.K.

(1)This section applies where the Bank of England has made a share transfer instrument in accordance with section 12(2) (“the original instrument”) providing for the transfer of securities issued by a bank (“the bank”) to a bridge bank.

(2)The Bank of England may make one or more property transfer instruments in relation to the bank (“bridge bank supplemental property transfer instruments”).

(3)A bridge bank supplemental property transfer instrument is an instrument which—

(a)provides for property, rights or liabilities of the bank to be transferred (whether accruing or arising before or after the original instrument);

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the bank (whether the transfer has been or is to be effected by the instrument or otherwise).

(4)Sections 7 and 8 do not apply to a bridge bank supplemental property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(5)Before making a bridge bank supplemental property transfer instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(6)The possibility of making a bridge bank supplemental property transfer instrument in reliance on subsection (2) is without prejudice to the possibility of making a property transfer instrument in accordance with section 12(2) (and not in reliance on subsection (2) above).

(7)Section 42 applies where the Bank of England has made a bridge bank supplemental property transfer instrument.

Textual Amendments

44EBridge bank: supplemental reverse property transfer powersU.K.

(1)This section applies where the Bank of England has made a bridge bank supplemental property transfer instrument in accordance with section 44D (“the original instrument”).

(2)The Bank of England may make one or more reverse property transfer instruments (“bridge bank supplemental reverse property transfer instruments”) in respect of property, rights or liabilities of the transferee under the original instrument.

(3)A bridge bank supplemental reverse property transfer instrument is an instrument which—

(a)provides for transfer to the transferor under the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

(4)Sections 7 and 8 do not apply to a bridge bank supplemental reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(5)The Bank of England must not make a bridge bank supplemental reverse property transfer instrument unless—

(a)the transferee under the original instrument is—

(i)a company wholly owned by the Bank of England,

(ii)a company wholly owned by the Treasury, or

(iii)a nominee of the Treasury, or

(b)it is made with the written consent of the transferee under the original instrument.

(6)Before making a bridge bank supplemental reverse property transfer instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)Section 42 applies where the Bank of England has made a bridge bank supplemental reverse property transfer instrument.]

Textual Amendments

45Temporary public ownership: property transferU.K.

(1)This section applies where the Treasury have made a share transfer order, in respect of securities issued by a bank, in accordance with section 13(2) (“the original order”).

(2)The Treasury may make one or more property transfer orders.

(3)A property transfer order is an order which—

(a)provides for property, rights or liabilities of the bank to be transferred (whether accruing or arising before or after the original order);

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the bank (whether the transfer has been or is to be effected by the order or otherwise).

(4)Sections 7, 8 and 9 do not apply to a property transfer order.

(5)A property transfer order is to be treated—

(a)in the same way as a share transfer order for the procedural purposes of section 25, but

(b)as a property transfer instrument for all other purposes (including for the purposes of the application of powers under this Part).

[F270(5A)In the application of section 34(8) by virtue of subsection (5)(b) above, the reference to the Bank of England is to be treated as a reference to the Treasury.]

(6)In the application of section 39 by virtue of subsection (5)(b) above, the power to give directions under section 39(7) vests in the Treasury (instead of the Bank of England).

(7)Section 42 applies where the Treasury has made a property transfer order.

(8)Before making a property transfer order the Treasury must consult—

[F271(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

Textual Amendments

F271S. 45(8)(a)(aa) substituted for s. 45(8)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 24 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I61S. 45 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I62S. 45 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

46Temporary public ownership: reverse property transferU.K.

(1)This section applies where the Treasury have made a property transfer order in accordance with section 45(2) (“the original order”) F272....

(2)The Treasury may make one or more reverse property transfer orders in respect of property, rights or liabilities of the transferee under the original order.

(3)A reverse property transfer order is a property transfer order which—

(a)provides for transfer to the transferor under the original order;

(b)makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, could be or could have been transferred.

[F273(3A)The Treasury must not make a reverse property transfer order unless—

(a)the transferee under the original order is—

(i)a company wholly owned by the Bank of England,

(ii)a company wholly owned by the Treasury, or

(iii)a nominee of the Treasury, or

(b)the reverse property transfer order is made with the written consent of the transferee under the original order.]

(4)Sections 7, 8 and 9 do not apply to a reverse property transfer order.

(5)A reverse property transfer order is to be treated—

(a)in the same way as a share transfer order for the procedural purposes of section 25, but

(b)as a property transfer instrument for all other purposes (including for the purposes of the application of a power under this Part).

[F274(5A)In the application of section 34(8) by virtue of subsection (5)(b) above, the reference to the Bank of England is to be treated as a reference to the Treasury.]

(6)In the application of section 39 by virtue of subsection (5)(b) above, the power to give directions under section 39(7) vests in the Treasury (instead of the Bank of England).

(7)Before making a reverse property transfer order the Treasury must consult—

[F275(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

(8)Section 42 applies where the Treasury have made a reverse property transfer order.

Textual Amendments

F272Words in s. 46(1) omitted (1.4.2013) by virtue of Financial Services Act 2012 (c. 21), ss. 97(7)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F275S. 46(7)(a)(aa) substituted for s. 46(7)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 25 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I63S. 46 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I64S. 46 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

47Restriction of partial transfersU.K.

(1)In this Part “partial property transfer” means a property transfer instrument which provides for the transfer of some, but not all, of the property, rights and liabilities of a bank.

[F276(1A)In subsection (1) the reference to a “bank” includes a resolution company (even if it is not a bank).]

(2)The Treasury may by order—

(a)restrict the making of partial property transfers;

(b)impose conditions on the making of partial property transfers;

(c)require partial property transfers to include specified provision or provision to a specified effect;

(d)provide for a partial property transfer to be void or voidable, or for other consequences (including automatic transfer of other property, rights or liabilities) to arise, if or in so far as the partial property transfer is made or purported to be made in contravention of a provision of the order (or of another order under this section).

[F277(3)Provision under subsection (2) may, in particular, refer to—

(a)particular classes of deposit;

(b)particular classes of client assets.]

(4)An order may apply to transfers generally or only to transfers—

(a)of a specified kind, or

(b)made or applying in specified circumstances.

(5)An order—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Textual Amendments

Commencement Information

I65S. 47 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I66S. 47 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

48Power to protect certain interestsU.K.

(1)In this section—

(a)“security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another,

(b)“title transfer collateral arrangements” are arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged,

(c)“set-off” arrangements are arrangements under which two or more debts, claims or obligations can be set off against each other,

(d)“netting arrangements” are arrangements under which a number of claims or obligations can be converted into a net claim or obligation and include, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt, and

(e)“protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements.

(2)The Treasury may by order—

(a)restrict the making of partial property transfers in cases that involve, or where they might affect, protected arrangements;

(b)impose conditions on the making of partial property transfers in cases that involve, or where they might affect, protected arrangements;

(c)require partial property transfers to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements;

(d)provide for a partial property transfer to be void or voidable, or for other consequences (including automatic transfer of other property, rights or liabilities) to arise, if or in so far as the partial property transfer is made or purported to be made in contravention of a provision of the order (or of another order under this section).

(3)An order may apply to protected arrangements generally or only to arrangements—

(a)of a specified kind, or

(b)made or applying in specified circumstances.

(4)An order may include provision for determining which arrangements are to be, or not to be, treated as protected arrangements; in particular, an order may provide for arrangements to be classified not according to their description by the parties but according to one or more indications of how they are treated, or are intended to be treated, in commercial practice.

(5)In this section “arrangements” includes arrangements which—

(a)are formed wholly or partly by one or more contracts or trusts;

(b)arise under or are wholly or partly governed by the law of a country or territory outside the United Kingdom;

(c)wholly or partly arise automatically as a matter of law;

(d)involve any number of parties;

(e)operate partly by reference to other arrangements between other parties.

(6)An order—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Commencement Information

I67S. 48 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I68S. 48 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F27848ACreation of liabilitiesU.K.

(1)The provision that may be made by a property transfer instrument or order in reliance on section 33(1)(b), 42(3)(b), [F27942A(3)(b),] 43(3)(b), 44(4)(c)[F280, 44A(3)(b)], [F28144D(3)(b), 44E(3)(b),] 45(3)(b) or 46(3)(b) includes provision for the creation of liabilities.

(2)The provision may be framed by reference to an agreement which has been or is to be entered into, or anything else which has been or is to be done, by any person (including a person other than the person making the instrument or order).]

Textual Amendments

F279Words in s. 48A(1) inserted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 97(8), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

[F282Bail-in optionU.K.

Textual Amendments

F282Ss. 48B-48W and cross-heading inserted (1.3.2014 for the insertion of s. 48P for specified purposes, 31.12.2014 in so far as not already in force) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 2 para. 4; S.I. 2014/377, art. 2(1)(b), Sch. Pt. 2; S.I. 2014/3160, art. 2(1)(b)

48BSpecial bail-in provisionU.K.

(1)“Special bail-in provision”, in relation to a bank, means any of the following (or any combination of the following)—

(a)provision cancelling a liability owed by the bank;

(b)provision modifying, or changing the form of, a liability owed by the bank;

(c)provision that a contract under which the bank has a liability is to have effect as if a specified right had been exercised under it.

(2)“Special bail-in provision”, in relation to a bank, also includes any associated provision (see subsection (3)) that the Bank of England may think it appropriate to make in consequence of any provision under subsection (1) that—

(a)is made in the same resolution instrument, or

(b)has been made in another resolution instrument in respect of the bank.

(3)“Associated provision” means provision cancelling or modifying a contract under which a banking group company has a liability.

(4)A power to make special bail-in provision—

(a)may be exercised only for the purpose of, or in connection with, reducing, deferring or cancelling a liability of the bank;

(b)may not be exercised so as to affect any excluded liability.

(5)The following rules apply to the interpretation of subsection (1).

1The reference to cancelling a liability owed by the bank includes a reference to cancelling a contract under which the bank has a liability.

2The reference to modifying a liability owed by the bank includes a reference to modifying the terms (or the effect of the terms) of a contract under which the bank has a liability.

3The reference to changing the form of a liability owed by the bank, includes, for example—

(a)converting an instrument under which the bank owes a liability from one form or class to another,

(b)replacing such an instrument with another instrument of a different form or class, F283...

(c)creating a new security (of any form or class) in connection with the modification of such an instrument[F284, or

(d) converting those liabilities into securities issued by a bridge bank or a UK parent undertaking (within the meaning of section 6C(7)).]

(6)Examples of special bail-in provision include—

(a)provision that transactions or events of any specified kind have or do not have (directly or indirectly) specified consequences or are to be treated in a specified manner for specified purposes;

(b)provision discharging persons from further performance of obligations under a contract and dealing with the consequences of persons being so discharged.

(7)The form and class of the instrument (“the resulting instrument”) into which an instrument is converted, or with which it is replaced, do not matter for the purposes of paragraphs (a) and (b) of rule 3 in subsection (5); for instance, the resulting instrument may (if it is a security) fall within Class 1 or any other Class in section 14.

[F285(7A)Liabilities of the bank are “excluded liabilities” if they are—

(a)liabilities listed in subsection (8), or

(b)liabilities which the Bank of England has excluded under subsection (10) from the application of special bail-in provision.]

(8)The following liabilities of the bank [F286are the excluded liabilities referred to in subsection (7A)(a)] —

(a)liabilities representing protected deposits;

(b)any liability, so far as it is secured;

(c)liabilities that the bank has by virtue of holding client assets;

(d)liabilities with an original maturity of less than 7 days owed by the bank to a credit institution or investment firm;

(e)liabilities [F287with a remaining maturity of less than 7 days] arising from participation in designated settlement systems and owed to such systems or to operators of, or participants in, such systems;

[F288(ea)liabilities with a remaining maturity of less than 7 days owed by the bank to a recognised central counterparty F289... or a third country central counterparty;]

F290(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)liabilities owed to an employee or former employee in relation to salary or other remuneration, except [F291—

(i)variable remuneration that is not regulated by a collective bargaining agreement, and

(ii)variable remuneration of material risk takers [F292within the meaning of rule 3 of Part 152 (remuneration) of the PRA rulebook (other than persons deemed by virtue of rule 3.2 not to be material risk takers and notified to the PRA in accordance with rule 3.2)];]

[F293(h)liabilities owed to a pension scheme, except for liabilities owed in connection with variable remuneration of the kind mentioned in paragraph (g)(i) or (ii),]

(i)liabilities owed to creditors arising from the provision to the bank of goods or services (other than financial services) that are critical to the daily functioning of the bank's operations.

[F294(j)liabilities owed by the bank to the scheme manager of the [F295FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) of the Financial Services and Markets Act 2000];]

[F296(k)liabilities owed by the bank to another bank or a banking group company which (in either case)—

(i)is part of the same resolution group as the bank, and

(ii)is not itself a resolution entity,

where the liabilities do not rank below ordinary non-preferential debts under the hierarchy of claims in normal insolvency proceedings.]

(9)The following special rules apply in cases involving banking group companies—

(a)a liability [F297is not within subsection (8)(d)] if the credit institution or investment firm to which the liability is owed is a banking group company in relation to the bank (see section 81D);

(b)in subsection (8)(i) the reference to creditors does not include companies which are banking group companies in relation to the bank.

[F298(10)The Bank of England may, in a resolution instrument, exclude any [F299bail-in] liability or class of [F299bail-in] liabilities from the application of any special bail-in provision in relation to the bank if, and only if, the Bank of England—

(a)thinks the exclusion is justified on one or more of the grounds set out in subsection (12), F300...

F300(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11)The power conferred by subsection (10) may be exercised to exclude only part of [F301a bail-in liability], or part of each of [F302the bail-in liabilities] of a particular class; and where it is so exercised that part is treated as [F301a bail-in liability] excluded under that subsection and the remainder is treated as an [F301a bail-in liability] which has not been so excluded.

(12)The grounds are—

(a)that it is not reasonably possible to give effect to special bail-in provision in relation to the liability or class within a reasonable time;

(b)that the exclusion is necessary and proportionate to achieve the continuity of critical functions and core business lines in a manner that maintains the ability of the bank to continue key operations, services and transactions;

(c)that the exclusion is necessary and proportionate to avoid giving rise to widespread contagion, in particular as regards protected deposits held by natural persons or [F303micro, small and medium-sized enterprises], which would severely disrupt the functioning of financial markets, including financial market infrastructures, in a manner that could cause a serious disturbance to the economy of [F304the United Kingdom];

(d)that the making of special bail-in provision in relation to the liability would cause a reduction in value such that the losses borne by other creditors would be higher than if the liability were excluded.

(13)When deciding whether to exclude liabilities under subsection (10) or (11), the Bank of England must give due consideration to—

(a)the principle that all the liabilities of the bank ought to be treated in accordance with the priority they would enjoy on a liquidation,

(b)the principle that any creditors who would have equal priority on a liquidation ought to bear losses on an equal footing with each other,

(c)the level of loss absorbing capacity that would remain in the bank if the liability or liabilities of a class were wholly or partly excluded, and

(d)the need to maintain adequate resources to deal with the implications for public funds of anything done, in future, in connection with the exercise of one or more of the stabilisation powers.

[F305(13A)The Treasury may by regulations made by statutory instrument make further provision in connection with the exercise of functions under subsection (10) (including provision about further circumstances in which functions under that subsection may or must be exercised).

(13B)Regulations under subsection (13A) may—

(a)amend subsections (12) and (13) by adding any provision;

(b)amend or revoke Commission Delegated Regulation (EU) 2016/860;

(c)amend that Regulation by adding, omitting or varying any provision (pending the revocation of the whole Regulation under paragraph (b).

(13C)A statutory instrument containing regulations under subsection (13A) may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.]

(14)For the purposes of subsection (12)—

  • [F306“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for the bank or a group which includes the bank (or in the case of an instrument made in relation to a resolution company, of the resolution company);]

  • “protected deposit” has the meaning given by section 48C, and

  • [F307“micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC.]]

[F308(15)For the purposes of the definition of “core business lines”—

(a)Article 7 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of core business lines) applies, and

(b)“group” has the meaning given by section 3(2)(b).

(16)The Treasury may by regulations made by statutory instrument specify criteria for the determination of the business lines and associated services referred to in the definition of “core business lines”.

(17)The power conferred by subsection (16) includes—

(a)power to amend or revoke Article 7 of Commission Delegated Regulation (EU) 2016/778; and

(b)power to amend or repeal subsection (15)(a).

(18)A statutory instrument containing regulations under subsection (16) is subject to annulment in pursuance of a resolution of either House of Parliament.]

Textual Amendments

F283Word in s. 48B(5) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 48(3)

Modifications etc. (not altering text)

C3S. 48B modified (31.12.2020 immediately before IP completion day) by S.I. 2019/341, reg. 18(1) (as inserted by The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), regs. 1(2), 20(5); 2020 c. 1, Sch. 5 para. 1(1))

48CMeaning of “protected deposit”U.K.

[F309(1)A deposit is “protected” so far as it is covered by [F310the FSCS].]

(4)In [F311subsection (1)] and section 48B(8)(a), “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), but ignoring the exclusions in article 6.

Textual Amendments

F309S. 48C(1) substituted for s. 48C(1)-(3) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 49(2)

48DGeneral interpretation of section 48BU.K.

(1)In section 48B—

  • “client assets” means assets which the bank has undertaken to hold on trust for, or on behalf of, a client;

  • “contract” includes any instrument;

  • “credit institution” means any credit institution as defined in Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council, other than an entity mentioned in [F312Article 2.5(2), (3) or [F313(24)]] of Directive 2013/36/EU of the European Parliament and of the Council;

  • [F314“designated settlement system” means a system which is designated in accordance with the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979);]

  • F315...

  • “employee” includes the holder of an office;

  • F316...

  • F317...

  • “pension scheme” includes any arrangement for the payment of pensions, allowances and gratuities;

  • [F318“recognised central counterparty” has the meaning given in section 285 of the Financial Services and Markets Act 2000;]

  • “secured” means secured against property or rights, or otherwise covered by collateral arrangements;

  • [F319“third country central counterparty” has the meaning given in section 285 of the Financial Services and Markets Act 2000.]

(2)In subsection (1)—

  • “assets” has the same meaning as in section 232(4) (ignoring for these purposes section 232(5A)(b));

  • “collateral arrangements” includes arrangements which are title transfer collateral arrangements for the purposes of section 48.

[F320(2A)The definition of “investment firm” in section 258A applies for the purposes of section 48B but for these purposes—

(a)any exclusions made under the power conferred by subsection (2)(b) of section 258A are to be ignored; and

(b)an institution is to be treated as falling within the definition only if it has permission to carry on the investment services and activities in point 3 or 6 of Part 3 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.]

F321(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

48EReport on special bail-in provisionU.K.

(1)This section applies where the Bank of England makes a resolution instrument containing special bail-in provision (see section 48B).

(2)The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision has been made in the case of the liabilities concerned.

(3)If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.

(4)The insolvency treatment principles are that where an instrument includes special bail-in provision—

(a)the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and

(b)any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.

(5)A report must comply with any other requirements as to content that may be specified by the Treasury.

(6)A report must be made as soon as reasonably practicable after the making of the resolution instrument to which it relates.

(7)The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.

48FPower to amend definition of “excluded liabilities”U.K.

(1)The Treasury may by order amend section 48B(8) by—

(a)adding to the list of excluded liabilities;

(b)amending or omitting any paragraph of that subsection, other than paragraphs (a) to (c).

(2)The Treasury may by order amend section 48C or 48D.

(3)The powers conferred by subsections (1) and (2) include power to make consequential and transitional provision.

(4)An order under this section—

(a)is to be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(5)The Treasury must consult before laying a draft order under this section before Parliament.

48GPriority between creditorsU.K.

(1)The Treasury may, for the purpose of ensuring that the treatment of liabilities in any instrument that contains special bail-in provision is aligned to an appropriate degree with the treatment of liabilities on an insolvency, by order specify matters or principles to which the Bank of England is to be required to have regard in making any such instrument.

(2)An order may, for example, specify the insolvency treatment principles (as defined in section 48E(4)) or alternative principles.

(3)An order may specify the meaning of “insolvency” for one or more purposes of the order.

(4)An order may amend sections 44C(4) and 48E(4).

(5)An order—

(a)is to be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

48HBusiness reorganisation plansU.K.

(1)A resolution instrument may require a [F322resolution administrator], or one or more directors of the bank, to—

(a)draw up a business reorganisation plan with respect to the bank, F323...

(b)submit it to the Bank of England within the period allowed by (or under) the instrument [F324; and

(c)submit to the Bank of England progress reports on the implementation of the plan at such intervals as the instrument may require.]

(2)“Business reorganisation plan” means a plan that includes—

(a)an assessment of the factors that caused Condition 1 in section 7 to be met in the case of the bank,

(b)a description of the measures to be adopted with a view to restoring the viability of the bank, and

(c)a timetable for the implementation of those measures.

(3)Where a person has submitted a business reorganisation plan to the Bank of England under subsection (1) (or has re-submitted a plan under subsection (4)), the Bank of England—

(a)must approve the plan if satisfied that the plan is appropriately designed for meeting the objective mentioned in subsection (2)(b);

(b)must otherwise require the person to amend the plan in a specified manner.

(4)Where the Bank of England has required a person to amend a business re-organisation plan, the person must re-submit the amended plan within the period allowed by (or under) the resolution instrument.

(5)Before deciding what action to take under subsection (3) the Bank of England must (for each submission or re-submission of a plan) consult—

(a)the PRA, and

(b)the FCA.

(6)A business reorganisation plan may include recommendations by the person submitting the plan as to the exercise by the Bank of England of any of its powers under this Part in relation to the bank.

(7)Where a resolution instrument contains provision under subsection (1), the instrument may—

(a)specify further matters (in addition to those mentioned in subsection (2)) that must be dealt with in the business reorganisation plan;

(b)make provision about the timing of actions to be taken in connection with the making and approval of the plan;

(c)enable any provision that the Bank of England has power under paragraph (a) or (b) to make in the instrument to be made instead in an agreement between the Bank of England and the person required to draw up the business reorganisation plan.

[F325(7A)The Bank of England may make technical standards which—

(a)require progress reports mentioned in subsection (1)(c) to include such matters as are specified in the technical standards; or

(b)otherwise relate to the content of those progress reports, so far as dealing with matters so specified.]

(8)For the purposes of subsection (2)(b) the viability of a bank is to be assessed by reference to whether the bank satisfies, and (if so) for how long it may be expected to continue to satisfy, the threshold conditions (as defined in section 55B of the Financial Services and Markets Act 2000).

Textual Amendments

F32648IBail-in administrator: further functionsU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F32648JBail-in administrator: supplementaryU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F32648KBail-in administrator: moneyU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

48LPowers in relation to securitiesU.K.

(1)A resolution instrument may—

(a)cancel or modify any securities to which this subsection applies;

(b)convert any such securities from one form or class into another.

(2)Subsection (1) applies to securities issued by the bank that fall within Class 1 in section 14.

(3)A resolution instrument may—

(a)make provision with respect to rights attaching to securities issued by the bank;

(b)provide for the listing of securities issued by the bank to be discontinued [F327or suspended].

[F328(c)provide for the listing or admission to trading on a regulated market of securities in class 1 (and related class 3 securities) created in accordance with that or any other resolution instrument;

(d)provide for the listing or admission to trading on a regulated market of existing securities in class 2 modified by that or any other resolution instrument [F329(and, in that connection, for the disapplication of section 85(1) and (2) of the Financial Services and Markets Act 2000 (prohibition on listing etc of transferable securities without approved prospectus)].]

(4)The reference in subsection (1)(b) to converting securities from one form or class into another includes creating a new security in connection with the modification of an existing security.

[F330(4A)In subsection (2) any reference to a class of securities is to be construed in accordance with section 14.]

(5)The provision that may be made under subsection (3)(a) includes, for example—

(a)provision that specified rights attaching to securities are to be treated as having been exercised;

(b)provision that the Bank of England, or a [F331resolution administrator], is to be treated as authorised to exercise specified rights attaching to securities;

(c)provision that specified rights attaching to securities may not be exercised for a period specified in the instrument.

[F332(6)In subsection (3)—

(a)the reference to “listing” is to listing under section 74 of the Financial Services and Markets Act 2000, and

(b)“regulated market” has the meaning given in section 103(1) of the Financial Services and Markets Act 2000.]

[F333(6A)Where the listing of securities is suspended in accordance with a resolution instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, the Financial Services and Markets Act 2000 as still being listed.]

(7)The provision that may be made under this section in relation to any securities is in addition to any provision that the Bank of England may have power to make in relation to them under section 48B.

Textual Amendments

F33448MTermination rights, etcU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

48NDirectors [F335and senior managers] U.K.

(1)A resolution instrument may enable the Bank of England—

(a)to remove a director [F336or senior manager] of a specified bank;

(b)to vary the service contract of a director [F336or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F336or senior manager] of a specified bank;

(d)to appoint a director [F336or senior manager] of a specified bank.

(2)Subsection (1) also applies to a director [F337or senior manager] of any undertaking which is a banking group company in respect of a specified bank.

(3)Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.

[F338(4)In this section “senior manager” means a person who—

(a)exercises executive functions within a specified bank or banking group company, and

(b)is responsible, and directly accountable to the directors, for the day to day management of that bank or banking group company.]

Textual Amendments

48ODirections in or under resolution instrumentU.K.

(1)A resolution instrument may—

(a)require one or more directors of the bank to comply with any general or specific directions that may be set out in the instrument;

(b)enable the Bank of England to give written directions (whether general or specific) to one or more directors of the bank.

(2)A director—

(a)is not to be regarded as failing to comply with any duty owed to any person (for example, a shareholder, creditor or employee of the bank) by virtue of any action or inaction in compliance with a direction given under subsection (1)(a) or (b);

(b)is to be immune from liability in damages in respect of action or inaction in accordance with a direction.

(3)A director must comply with a direction within the period of time specified in the direction, or if no period of time is specified, as soon as reasonably practicable.

(4)A direction under subsection (1)(a) or (b) is enforceable on an application made by the Bank of England, by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

[F339(5)See also section 83ZR for further provision about enforcement of a direction under this section.]

Textual Amendments

Modifications etc. (not altering text)

C4S. 48O applied (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 86(1)(a) (with reg. 88)

48POrders for safeguarding certain financial arrangementsU.K.

(1)In this section “protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements.

(2)In subsection (1)—

  • “netting arrangements” means arrangements under which a number of claims or obligations can be converted into a net claim or obligation, and includes, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt;

  • “security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another;

  • “set-off arrangements” means arrangements under which two or more debts, claims or obligations can be set off against each other;

  • “title transfer collateral arrangements” means arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged.

(3)The Treasury may by order—

(a)restrict the exercise of any power within the scope of this paragraph in cases that involve, or where the exercise of the power might affect, protected arrangements;

(b)impose conditions on the exercise of any power within the scope of this paragraph in cases that involve, or where the exercise of the power might affect, protected arrangements;

(c)require any instrument that makes special bail-in provision to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements;

(d)provide for an instrument to be void or voidable, or for other consequences to arise, if or in so far as the instrument is made or purported to be made in contravention of a provision of the order (or of another order under this section);

(e)specify principles to which the Bank of England is to be required to have regard in exercising specified powers—

(i)that involve protected arrangements, or

(ii)where the exercise of the powers might affect protected arrangements.

(4)References to exercising a power within the scope of paragraph (a) or (b) of subsection (3) are to making an instrument containing provision made in reliance on section 12A(3)(a) or 44B (special bail-in provision).

(5)An order may apply to protected arrangements generally or only to arrangements—

(a)of a specified kind, or

(b)made or applying in specified circumstances.

(6)An order may include provision for determining which arrangements are to be, or not to be, treated as protected arrangements; in particular, an order may provide for arrangements to be classified not according to their description by the parties but according to one or more indications of how they are treated, or are intended to be treated, in commercial practice.

(7)In this section “arrangements” includes arrangements which—

(a)are formed wholly or partly by one or more contracts or trusts;

(b)arise under or are wholly or partly governed by the law of a country or territory outside the United Kingdom;

(c)wholly or partly arise automatically as a matter of law;

(d)involve any number of parties;

(e)operate partly by reference to other arrangements between parties.

(8)An order—

(a)is to be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

48QContinuityU.K.

(1)A resolution instrument may provide for anything (including legal proceedings) that relates to anything affected by the instrument and is in the process of being done immediately before the instrument takes effect to be continued from the time the instrument takes effect.

(2)A resolution instrument may modify references (express or implied) in an instrument or document.

(3)A resolution instrument may require or permit any person to provide information and assistance to the Bank of England or another person, for the purposes of or in connection with provision made or to be made in that or another resolution instrument.

Modifications etc. (not altering text)

C5S. 48Q applied (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 86(1)(b) (with reg. 88)

48RExecution and registration of instruments etcU.K.

(1)A resolution instrument may permit or require the execution, issue or delivery of an instrument.

(2)A resolution instrument may provide for any provision in the instrument to have effect irrespective of—

(a)whether an instrument has been produced, delivered, transferred or otherwise dealt with;

(b)registration.

(3)A resolution instrument may provide for the effect of an instrument executed, issued or delivered in accordance with the resolution instrument.

(4)A resolution instrument may—

(a)entitle a person to be registered in respect of a security;

(b)require a person to effect registration.

Modifications etc. (not altering text)

C6S. 48R applied (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 86(1)(c) (with reg. 88)

48SResolution instruments: general mattersU.K.

(1)Provision made in a resolution instrument takes effect despite any restriction arising by virtue of contract or legislation or in any other way.

(2)A resolution instrument may include incidental, consequential or transitional provision.

(3)In relying on subsection (2) a resolution instrument—

(a)may make provision generally or only for specified purposes, cases or circumstances, and

(b)may make different provision for different purposes, cases or circumstances.

Modifications etc. (not altering text)

C7S. 48S applied (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 86(1)(d) (with reg. 88)

48TProcedureU.K.

(1)As soon as is reasonably practicable after making a resolution instrument in respect of a bank the Bank of England must send a copy to—

(a)the bank,

(b)the Treasury,

(c)the PRA,

(d)the FCA, and

(e)any other person specified in the code of practice under section 5.

(2)As soon as is reasonably practicable after making a resolution instrument the Bank of England must publish a copy—

(a)on the Bank's internet website, F340...

(b)in two newspapers, chosen by the Bank of England to maximise the likelihood of the instrument coming to the attention of persons likely to be affected[F341, and

(c)if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act)),

and arrange for the publication of a copy on the internet website of the bank in respect of which the instrument was made.]

(3)Where the Treasury receive a copy of a resolution instrument under subsection (1) they must lay a copy before Parliament.

Textual Amendments

F340Word in s. 48T(2) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 57

Modifications etc. (not altering text)

C8S. 48T applied (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 86(1)(e) (with reg. 88)

48USupplemental resolution instrumentsU.K.

(1)This section applies where the Bank of England has made a resolution instrument (“the original instrument”) with respect to a bank.

(2)The Bank of England may make, with respect to the bank, one or more resolution instruments designated by the Bank of England as supplemental resolution instruments.

(3)[F342Section 7 does] not apply to a supplemental resolution instrument (but it is to be treated in the same way as a resolution instrument for all other purposes, including for the purposes of the application of a power under this Part).

(4)Before making a supplemental resolution instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(5)The possibility of making a supplemental resolution instrument in reliance on subsection (2) is without prejudice to the possibility of making a new instrument in accordance with section 12A(2) (and not in reliance on subsection (2) above).

Textual Amendments

48VOnward transferU.K.

(1)This section applies where the Bank of England has made a resolution instrument (“the original instrument”) providing for securities issued by a specified bank to be transferred to any person.

(2)The Bank of England may make one or more onward transfer resolution instruments.

(3)An onward transfer resolution instrument is a resolution instrument which—

(a)provides for the transfer of—

(i)securities which were issued by the bank before the original instrument and have been transferred by the original instrument or a supplemental resolution instrument, or

(ii)securities which were issued by the bank after the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that instrument, by another instrument or otherwise).

(4)An onward transfer resolution instrument may not transfer securities to the transferor under the original instrument.

(5)[F343Section 7 does] not apply to an onward transfer resolution instrument (but it is to be treated in the same way as any other resolution instrument for all other purposes, including for the purposes of the application of a power under this Part).

(6)Before making an onward transfer resolution instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(7)Section 48U applies where the Bank of England has made an onward transfer resolution instrument.

Textual Amendments

48WReverse transferU.K.

(1)This section applies where the Bank of England has made an instrument (“the original instrument”) that is either—

(a)a resolution instrument providing for the transfer of securities issued by a bank to a person (“the transferee”), or

(b)an onward transfer resolution instrument (see section 48V) providing for the transfer of securities issued by a bank to a person (“the onward transferee”).

(2)In a case falling within subsection (1)(a) the Bank of England may make one or more reverse transfer resolution instruments in respect of securities issued by the bank and held by the transferee (whether or not they were transferred by the original instrument).

(3)In a case falling within subsection (1)(b), the Bank of England may make one or more reverse transfer resolution instruments in respect of securities issued by the bank and held by the onward transferee.

(4)A reverse transfer resolution instrument is a resolution instrument which—

(a)provides for transfer to the transferor under the original instrument;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities which are, or could be or could have been, transferred under paragraph (a).

(5)Except where subsection (6) applies, the Bank of England may make a reverse transfer resolution instrument under subsection (2) only with the written consent of the transferee.

(6)This subsection applies where the transferee is—

(a)a [F344resolution administrator], or

(b)a person who is not to be authorised to exercise any rights attaching to the securities except on the Bank of England's instructions.

(7)The Bank of England may make a reverse transfer resolution instrument under subsection (3) only with the written consent of the onward transferee.

(8)[F345Section 7 does] not apply to a reverse transfer resolution instrument (but it is to be treated in the same way as any other resolution instrument for all other purposes including for the purposes of an application of a power under this Part).

(9)Before making a reverse transfer resolution instrument the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(10)Section 48U applies where the Bank of England has made a reverse transfer resolution instrument.]

Textual Amendments

[F34648WABail-in option: recovery of expensesU.K.

(1)The Bank of England may, in relation to the exercise of the bail-in option, direct a relevant bank to pay the Bank of England a fee to cover expenses reasonably incurred by the Bank in connection with exercising that option.

(2)The Treasury may direct a relevant bank to pay the Treasury a fee to cover expenses reasonably incurred by the Treasury in connection with the exercise by the Bank of England of the bail-in option in relation to the relevant bank.

(3)For the purposes of this section—

(a)a “relevant bank” is a bank in relation to which the Bank of England has made—

(i)a resolution instrument under section 12A(2),

(ii)a supplemental resolution instrument under section 48U(2), or

(iii)an instrument containing special bail-in provision under section 48B,

(b)the exercise of the bail-in option includes making any instrument containing special bail-in provision under section 48B.]

Textual Amendments

[F347Replacement of provisional valuationU.K.

Textual Amendments

F347Ss. 48X, 48Y and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 61

48X.Replacement of Bank’s provisional valuationU.K.

(1)Where the Bank of England has carried out a provisional valuation under section 6E(3) before making a mandatory reduction instrument or exercising a stabilisation power, the Bank must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a full valuation in accordance with this section as soon as reasonably practicable.

(2)The purpose of the valuation carried out under subsection (1) is to—

(a)ensure the full extent of any losses on the assets of the bank is recognised in the accounting records of the bank, and

(b)inform a decision by the Bank as to whether—

(i)additional consideration should be paid by a bridge bank or asset management vehicle for any property, rights or liabilities transferred by a property transfer instrument, or securities transferred by a share transfer instrument, or

(ii)the Bank should exercise the power under section 48Y(1) to increase or reinstate any liability which has been reduced or cancelled by a resolution instrument.

(3)A valuation carried out under subsection (1) must comply with subsections (5) and (6) of section 6E, and be accompanied by the information required in subsection (7) of that section.

48Y.Consequences of a replacement valuationU.K.

(1)Where the independent valuation carried out under section 48X(1) produces a higher valuation of the net asset value of the bank than a provisional valuation carried out under section 6E(3), the Bank of England may—

(a)modify any liability of the bank which has been reduced, deferred or cancelled by a mandatory reduction instrument or a resolution instrument so as to increase or reinstate that liability; or

(b)instruct a resolution company to pay additional consideration—

(i)to the bank for any property, rights or liabilities transferred to the resolution company by a property transfer instrument, or

(ii)to the previous holders of securities issued by the bank for any securities transferred to the resolution company by a share transfer instrument.

(2)The power in subsection (1)(a)—

(a)may not be exercised so as to increase the value of the liability beyond the value it would have had if the resolution instrument which reduced, cancelled or deferred it had not been made, and

(b)must be exercised by a mandatory reduction instrument or supplemental resolution instrument (whether or not that instrument contains any other provision authorised by this Part).]

[F348Termination rights etcU.K.

Textual Amendments

F348S. 48Z and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 62

48Z.Termination rights etcU.K.

(1)In this section—

  • “crisis management measure” has the meaning given in Article 2.1(102) of the recovery and resolution directive, and accordingly in relation to the United Kingdom means—

    (a)

    the exercise of a stabilisation power in relation to the bank by the Bank of England or the Treasury,

    (b)

    the appointment of a resolution administrator under section 62B,

    (c)

    the recognition by the Bank of England of third-country resolution action (or part of such action) in accordance with Chapter 5 of this Part, or

    (d)

    the exercise by the Bank of a stabilisation power by virtue of section 89I(3) (exercise of powers in support of third-country resolution action);

  • “crisis prevention measure” F349... means—

    (a)

    the imposition by the PRA or the FCA [F350under the Bank Recovery and Resolution (No 2) Order 2014 (SI 2014/3348) of a requirement to take relevant measures as described in article 15, 16, or 23 of that Order,],

    (b)

    the imposition by the Bank of England of a requirement to take measures to remove impediments to resolvability under [F351section 3A,]

    (c)

    [F352the taking by the FCA or the PRA of a measure for early intervention under article 111 of the Bank Recovery and Resolution (No. 2) Order 2014,]

    (d)

    the making of a mandatory reduction instrument by the Bank of England under section 6B [F353, or

    (e)

    the appointment by the PRA or the FCA of a person to act as a temporary manager under section 71C of the Financial Services and Markets Act 2000 ;]

  • “default event provision” means a Type 1 or Type 2 default event provision (see subsections (2) and (3));

  • “group” has the meaning given by section 474 of the Companies Act 2006;

  • “Part 1 instrument” means—

    (a)

    a mandatory reduction instrument,

    (b)

    a share transfer instrument,

    (c)

    a property transfer instrument, or

    (d)

    a resolution instrument.

  • “recognised third-country resolution action” means third-country resolution action, or a part of such action, recognised by the Bank of England in an instrument under section 89H(2);

  • [F354“third-country institution” means an institution established in a country or territory other than the United Kingdom that would, if it were established within the United Kingdom, be regarded as a bank, building society, credit union or investment firm;]

  • [F355“third-country parent financial holding company” means a parent financial holding company (within the meaning of Article 4.1(30) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;]

  • [F355“third-country parent institution” means a parent institution (within the meaning of Article 4.1(28) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;]

  • [F355“third-country parent mixed financial holding company” means a parent mixed financial holding company (within the meaning of Article 4.1(32) of the capital requirements regulation) established or formed under the law of a country or territory outside the United Kingdom;]

  • [F356“third-country parent undertaking” means a third-country parent institution, a third-country parent financial holding company or a third-country parent mixed financial holding company.]

(2)A Type 1 default event provision is a provision of a contract or other agreement that has the effect that if a specified event occurs or situation arises—

(a)the agreement is terminated, modified or replaced,

(b)rights or duties under the agreement are terminated, modified or replaced,

(c)a right accrues to terminate, modify or replace the agreement,

(d)a right accrues to terminate, modify or replace rights or duties under the agreement,

(e)a sum becomes payable or ceases to be payable,

(f)delivery of anything becomes due or ceases to be due,

(g)a right to claim a payment or delivery accrues, changes or lapses,

(h)any other right accrues, changes or lapses, or

(i)an interest is created, changes or lapses.

(3)A Type 2 default event provision is a provision of a contract or other agreement that has the effect that a provision of the contract or agreement—

(a)takes effect only if a specified event occurs or does not occur,

(b)takes effect only if a specified situation arises or does not arise,

(c)has effect only for so long as a specified event does not occur,

(d)has effect only while a specified situation lasts,

(e)applies differently if a specified event occurs,

(f)applies differently if a specified situation arises, or

(g)applies differently while a specified situation lasts.

(4)For the purposes of subsections (2) and (3) it is the effect of a provision that matters, not how it is described (nor, for example, whether it is presented in a positive or a negative form).

(5)[F357Subject to subsection (6A), subsection] (6) applies where a contract or other agreement—

(a)is entered into by a bank, a third-country institution or a third-country parent undertaking,

(b)is entered into by a subsidiary undertaking of a bank, a third-country institution or a third-country parent undertaking, whose obligations are guaranteed by a company which is a member of the same group as the bank, third-country institution or third-country parent undertaking, or

(c)is entered into by an undertaking which is a member of the same group as a bank, third-country institution, or third country parent undertaking,

and the substantive obligations provided for in the contract or agreement (including payment and delivery obligations and provision of collateral) continue to be performed.

(6)The following are to be disregarded in determining whether a default event provision applies—

(a)a crisis prevention measure, crisis management measure or recognised third-country resolution action taken in relation to the bank, third country institution or a member of the same group as the bank or third country institution, and

(b)the occurrence of any event directly linked to the application of such a measure or action.

[F358(6A)A Part 1 instrument or share transfer order may provide for subsection (6)—

(a)not to apply in relation to a contract or other agreement, or

(b)to apply in relation to a contract or other agreement only to the extent specified by the Bank of England in the instrument or by the Treasury in the order.

(6B)Provision may be made under subsection (6A) only if the Bank of England (in the case of a Part 1 instrument) or the Treasury (in the case of a share transfer order) consider that such provision would advance one or more of the special resolution objectives.]

(7)A Part 1 instrument or share transfer order may provide for subsection (8) or (9) to apply (but need not apply either) in circumstances where subsection (6) would not apply.

(8)If this subsection applies, the Part 1 instrument or share transfer order is to be disregarded in determining whether a default event provision applies.

(9)If this subsection applies, the Part 1 instrument or share transfer order is to be disregarded in determining whether a default event provision applies except so far as the instrument or order provides otherwise.

(10)In subsections (7), (8) and (9) a reference to the Part 1 instrument or share transfer order is a reference to—

(a)the making of the instrument or order,

(b)anything that is done by the instrument or order or is to be, or may be, done under or by virtue of the instrument or order, and

(c)any action or decision taken or made under this or another enactment in so far as it resulted in, or was connected to, the making of the instrument or order.

(11)Provision under subsection (7) may apply subsection (8) or (9)—

(a)generally or only for specified purposes, cases or circumstances, or

(b)differently for different purposes, cases or circumstances.

(12)A thing is not done by virtue of a Part 1 instrument or share transfer order for the purposes of subsection (10)(b) merely by virtue of being done under a contract or other agreement rights or obligations under which have been affected by the instrument or order.]

Textual Amendments

CompensationU.K.

49OrdersU.K.

(1)This Part provides [F359four] methods of protecting the financial interests of transferors and others in connection with share transfer instruments and orders[F359, property transfer instruments and orders and resolution instruments].

(2)A “compensation scheme order” is an order —

(a)establishing a scheme for determining whether transferors should be paid compensation, or providing for transferors to be paid compensation, and

(b)establishing a scheme for paying any compensation.

[F360(2A)A “bail-in compensation order” is an order establishing a scheme for determining, in accordance with section 52A, whether any transferors or others should be paid compensation.]

(3)A “resolution fund order” is an order establishing a scheme under which transferors become entitled to the proceeds of the disposal of things transferred—

(a)in specified circumstances, and

(b)to a specified extent.

(4)A “third party compensation order” is provision made in accordance with section 59 for compensation to be paid to persons other than transferors.

Textual Amendments

Commencement Information

I69S. 49 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

50Sale to private sector purchaserU.K.

(1)This section applies if the Bank of England makes a share transfer instrument or a property transfer instrument in accordance with section 11(2).

(2)The Treasury shall make a compensation scheme order.

(3)An order made by virtue of subsection (2) may include a third party compensation order.

(4)In the case of a partial property transfer, an order made by virtue of subsection (2) must include a third party compensation order.

Commencement Information

I70S. 50 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I71S. 50 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

51Transfer to temporary public ownershipU.K.

(1)This section applies if the Treasury make a share transfer order in accordance with section 13(2).

(2)The Treasury shall make either—

(a)a compensation scheme order, or

(b)a resolution fund order.

(3)A resolution fund order made by virtue of subsection (2)(b) may include—

(a)a compensation scheme order;

(b)a third party compensation order (which may, in particular, make provision, in respect of specified classes of creditor, for rights in addition to any rights they may have by virtue of the resolution fund order).

(4)A compensation scheme order made by virtue of subsection (2) may include a third party compensation order.

Commencement Information

I72S. 51 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I73S. 51 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

52Transfer to [F361resolution company] U.K.

[F362(1)This section applies if the Bank of England makes—

(a)a share transfer instrument or a property transfer instrument under section 12(2), or

(b)a property transfer instrument under section 12ZA(3).]

(2)The Treasury shall make a resolution fund order.

(3)An order made by virtue of subsection (2) may include—

(a)a compensation scheme order;

(b)a third party compensation order (which may, in particular, make provision, in respect of [F363persons of a specified description,] for rights in addition to any rights they may have by virtue of the resolution fund order).

(4)In the case of a partial property transfer, the resolution fund order must include a third party compensation order.

Textual Amendments

F361Words in s. 52 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 63(2)

Commencement Information

I74S. 52 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I75S. 52 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F36452ABail-in optionU.K.

(1)Subsection (2) applies if the Bank of England makes—

(a)a resolution instrument under section 12A(2), or

(b)a property transfer instrument under section 41A(2).

(2)The Treasury must make a bail-in compensation order (see section 49(2A)).

(3)A bail-in compensation order may include provision for—

(a)an independent valuer (in which case sections 54 to 56 are to apply);

(b)valuation principles (in which case section 57(2) to (5) is to apply).]

Textual Amendments

53Onward and reverse transfers [F365etc] U.K.

(1)This section applies where—

[F366(zza)the Bank of England makes a supplemental share transfer instrument under section 26,]

[F367(zzb)the Bank of England makes an onward share transfer instrument under section 26ZA,]

[F368(za)the Bank of England makes a F369... reverse share transfer instrument under section 26A,]

[F370(zb)the Treasury makes a supplemental share transfer order under section 27,]

(a)the Treasury make an onward share transfer order under section 28,

(b)the Treasury makes a reverse share transfer order under section 29,

(c)the Bank of England makes a [F371resolution company] share transfer instrument under section 30,

(d)the Bank of England makes a [F372resolution company] reverse share transfer instrument under section 31,

[F373(dza)the Bank of England makes a supplemental property transfer instrument under section 42,]

[F374(da)the Bank of England makes a private sector reverse property transfer instrument under section 42A,]

(e)the Bank of England makes an onward property transfer instrument under section 43,

(f)the Bank of England makes a reverse property transfer instrument under section 44,

[F375(fa)the Bank of England makes a reverse property transfer instrument under section 44A(2),]

[F376(fb)the Bank of England makes a bridge bank supplemental property transfer instrument under section 44D,

(fc)the Bank of England makes a bridge bank supplemental reverse property transfer instrument under section 44E,]

(g)the Treasury make a property transfer order under section 45, F377...

(h)the Treasury make a reverse property transfer order under section 46.

[F378(i)the Bank of England makes a supplemental resolution instrument under section 48U,

(j)the Bank of England makes an onward transfer resolution instrument under section 48V(2), or

(k)the Bank of England makes a reverse transfer resolution instrument under section 48W(2) or (3).]

(2)The Treasury may make—

(a)a compensation scheme order;

(b)a third party compensation order.

Textual Amendments

F369Words in s. 53(1)(za) omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 16(b)

F371Words in s. 53(1)(c) substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 64

F372Words in s. 53(1)(d) substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 64

Commencement Information

I76S. 53 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I77S. 53 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

54Independent valuer[F379: compensation scheme order or bail-in compensation order] U.K.

(1)A compensation scheme order [F380or bail-in compensation order] may provide for the amount of any compensation payable to be determined by a person appointed in accordance with the order (the “independent valuer”); and subsections (2) to (5) apply to an order which includes provision for an independent valuer.

(2)An order must provide for the independent valuer to be appointed by a person appointed by the Treasury (“the appointing person”).

(3)An order may either—

(a)require the Treasury to make arrangements to identify a number of possible independent valuers, one of whom is to be selected by the appointing person, or

(b)require the appointing person to make arrangements to select the independent valuer, having regard to any criteria specified in the order.

(4)The independent valuer may be removed only—

(a)on the grounds of incapacity or serious misconduct, and

(b)by a person specified by the Treasury in accordance with the compensation scheme order [F381or bail-in compensation order].

(5)An order must include provision for resignation and replacement of the independent valuer (and subsections (2) and (3) apply to replacement as to the first appointment).

Textual Amendments

Commencement Information

I78S. 54 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I79S. 54 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

55Independent valuer: supplementalU.K.

(1)An independent valuer may do anything necessary or desirable for the purposes of or in connection with the performance of the functions of the office.

(2)The Treasury may by order confer specific functions on independent valuers; in particular, the order may—

(a)enable an independent valuer to apply to a court or tribunal for an order requiring the provision of information or the giving of oral or written evidence;

(b)enable or require independent valuers to publish, disclose or withhold information.

(3)Provision under subsection (2) may—

(a)confer a discretion on independent valuers;

(b)confer jurisdiction on a court or tribunal;

(c)make provision about oaths, expenses and other procedural matters relating to the giving of evidence or the provision of information;

(d)create a criminal offence;

(e)make other provision about enforcement.

(4)An independent valuer may appoint staff.

(5)The Treasury may by order make provision about the procedure to be followed by independent valuers.

(6)The Treasury shall by order make provision for—

(a)reconsideration of a decision of an independent valuer, and

(b)appeal to a court or tribunal against a decision of an independent valuer.

(7)Independent valuers (and their staff) are neither servants nor agents of the Crown (and, in particular, are not civil servants).

(8)Records of an independent valuer are public records for the purposes of the Public Records Act 1958.

(9)An order under this section—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of either House of Parliament.

[F382(10)But subsection (9)(b) does not apply if the order is contained in a statutory instrument that contains an order to which section 62 applies.]

Textual Amendments

Commencement Information

I80S. 55 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

56Independent valuer: moneyU.K.

(1)The Treasury may by order provide for the payment by the Treasury of remuneration and allowances to—

(a)independent valuers,

(b)staff of independent valuers,

(c)appointing persons,

[F383(ca)persons mentioned in section 54(4)(b),] and

(d)monitors.

(2)An order—

(a)must provide for the appointment by the Treasury of a person to monitor the operation of the arrangements for remuneration and allowances for independent valuers;

(b)may require, or enable a compensation scheme order[F384, third party compensation order or bail-in compensation order] to require, the monitor's approval before specified things may be done in the course of those arrangements;

(c)may include provision about records and accounts;

(d)may make provision about numbers of staff and the terms and conditions of their appointment (which may include provision requiring the approval of the Treasury or the monitor).

(3)In subsection (1) a reference to the payment of allowances to a person includes a reference to the payment to or in respect of the person of sums by way of or in respect of pension.

(4)Independent valuers (and their staff) are not liable for damages in respect of anything done in good faith for the purposes of or in connection with the functions of the office (subject to section 8 of the Human Rights Act 1998).

(5)An order under this section—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of either House of Parliament.

[F385(6)But subsection (5)(b) does not apply if the order is contained in a statutory instrument that contains an order to which section 62 applies.]

Textual Amendments

F383S. 56(1)(ca) inserted (8.4.2010) by Financial Services Act 2010 (c. 28), ss. 21(4)(a), 26(1)(f)

Commencement Information

I81S. 56 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

57Valuation principlesU.K.

(1)A compensation scheme order [F386or bail-in compensation order] may specify principles (“valuation principles”) to be applied in determining the amount of compensation.

(2)Valuation principles may, in particular, require an independent valuer—

(a)to apply, or not to apply, specified methods of valuation;

(b)to assess values or average values at specified dates or over specified periods;

(c)to take specified matters into account in a specified manner;

(d)not to take specified matters into account.

(3)In determining an amount of compensation (whether or not in accordance with valuation principles) an independent valuer must disregard actual or potential financial assistance provided by the Bank of England or the Treasury (disregarding ordinary market assistance offered by the Bank on its usual terms).

(4)Valuation principles may require or permit an independent valuer to make assumptions; such as, for example, that the bank—

(a)has had a permission under [F387Part 4A] of the Financial Services and Markets Act 2000 (regulated activities) varied or cancelled,

(b)is unable to continue as a going concern,

(c)is in administration, or

(d)is being wound up.

(5)There is nothing to prevent the application of the valuation principles in an order from resulting in no compensation being payable to a transferor.

Textual Amendments

F387Words in s. 57(4)(a) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 26 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I82S. 57 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I83S. 57 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

58Resolution fundU.K.

(1)A resolution fund order must include provision for determining—

(a)who will be entitled to a share of the proceeds on disposal of things transferred,

(b)the way in which the proceeds will be calculated, and

(c)the way in which shares will be calculated.

(2)Provision under subsection (1)(b) may, in particular, provide for proceeds to be calculated net of—

(a)amounts required for the repayment of loans from public funds or for other payments in respect of public financial assistance;

(b)some or all of the administrative or other expenses incurred in connection with the provisions of this Part.

(3)A resolution fund order may include provision for—

(a)an independent valuer to make a determination under the order (in which case sections 54(2) to (5), 55 and 56 shall apply);

(b)valuation principles to be applied in making a determination (in which case section 57(2) shall apply).

(4)A resolution fund order may confer a discretionary function on—

(a)a Minister of the Crown,

(b)the Treasury,

(c)the Bank of England, or

(d)any other specified person.

(5)A resolution fund order may include provision for the determination of disputes about the application of its provisions (whether by conferring jurisdiction on a court or tribunal or otherwise).

(6)A resolution fund order may require the Bank of England in managing a [F388resolution company] to aim to maximise the proceeds available for distribution in accordance with the order; and an order which includes a requirement must—

(a)specify its extent, and

(b)include provision about how the Bank is to comply with it.

(7)A resolution fund order may require the Treasury to ensure that a bank in temporary public ownership in accordance with section 13(2) is managed with the aim of maximising the proceeds available for distribution in accordance with the order; and an order which includes a requirement must—

(a)specify its extent, and

(b)include provision about how the Treasury is to comply with it.

(8)A requirement under subsection (6) or (7) is to be complied with only in so far as is compatible with—

(a)pursuit of the special resolution objectives, and

(b)compliance with the code of practice under section 5.

Textual Amendments

Commencement Information

I84S. 58 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I85S. 58 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

59Third party compensation: discretionary provisionU.K.

(1)A power or duty in this Part to make a third party compensation order is a power or duty to make provision establishing a scheme for paying compensation to persons other than a transferor.

(2)A third party compensation order may—

(a)form part of a compensation scheme order or resolution fund order, or

(b)be a separate order.

(3)A third party compensation order may include provision for—

(a)an independent valuer (in which case sections 54 to 56 shall apply);

(b)valuation principles (in which case section 57(2) to (5) shall apply).

Commencement Information

I86S. 59 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I87S. 59 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

60Third party compensation: mandatory provisionU.K.

(1)The Treasury may make regulations about third party compensation arrangements in the case of partial property transfers.

(2)In making regulations the Treasury shall, in particular, have regard to the desirability of ensuring that if a residual bank enters insolvency after transfer, pre-transfer [F389shareholders or] creditors do not receive less favourable treatment than they would have received had it entered insolvency immediately before transfer.

(3)In subsection (2)—

(a)“residual bank” means a bank that is a transferor under a property transfer instrument,

(b)“pre-transfer [F390shareholder or] creditor” means a person who—

(i)[F391holds securities issued by, or is a creditor of, a] residual bank immediately before a property transfer instrument takes effect, and

(ii)satisfies conditions specified by the regulations, and

(c)the reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) a composition with creditors, and (vii) a scheme of arrangement.

(4)The regulations may—

(a)require a compensation scheme order or a resolution fund order to include a third party compensation order;

(b)require a third party compensation order to include provision of a specified kind or to specified effect;

(c)make provision which is to be treated as forming part of a third party compensation order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification).

(5)Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement—

(a)to depend in part upon the amounts which are or may be payable under a resolution fund order;

(b)to be contingent upon the occurrence or non-occurrence of specified events;

(c)to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or resolution fund order.

(6)Regulations may make provision about payment including, in particular, provision for payments—

(a)on account subject to terms and conditions;

(b)by instalment.

(7)Regulations—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Textual Amendments

Commencement Information

I88S. 60 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I89S. 60 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F39260AFurther mandatory provision: bail-in provisionU.K.

(1)The Treasury may make regulations about compensation arrangements in the case of—

(a)resolution instruments under section 12A(2) and supplemental resolution instruments under section 48U(2), and

(b)instruments (made under any provision) that include special bail-in provision.

(2)Regulations may—

(a)require a resolution fund order, a compensation scheme order, a third party compensation order or a bail-in compensation order to include provision of a specified kind or to specified effect;

(b)make provision that is to be treated as forming part of any such order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification).

(3)Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement—

(a)to depend in part upon the amounts which are or may be payable under a resolution fund order;

(b)to be contingent upon the occurrence or non-occurrence of specified events;

(c)to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or bail-in compensation order.

(4)Regulations may make provision about payment including, in particular, provision for payments—

(a)on account subject to terms and conditions;

(b)by instalment.

(5)Regulations—

(a)are to be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Textual Amendments

F392Ss. 60A, 60B inserted (1.3.2014 for specified purposes, 31.12.2014 in so far as not already in force) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 2 para. 6(8); S.I. 2014/377, art. 2(1)(b), Sch. Pt. 2; S.I. 2014/3160, art. 2(1)(b)

60BPrinciple of no less favourable treatmentU.K.

(1)In making regulations under section 60A the Treasury must, in particular, have regard to the desirability of ensuring that pre-resolution shareholders and creditors of a bank do not receive less favourable treatment than they would have received had the bank entered insolvency immediately before the coming into effect of the initial instrument.

(2)References in this section to the initial instrument are—

(a)in relation to compensation arrangements in the case of property transfer instruments under section [F39311(2), 12(2) or 12ZA(2)], to the first instrument to be made under [F394those provisions] with respect to the bank;

(b)in relation to compensation arrangements in other cases, to the first resolution instrument to be made under section 12A with respect to the bank.

(3)The “pre-resolution shareholders and creditors” of a bank are the persons who held securities issued by the bank, or were creditors of the bank, immediately before the coming into effect of the initial instrument.

(4)References in this section to insolvency include a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors, and (vii) a scheme of arrangement.]

Textual Amendments

F392Ss. 60A, 60B inserted (1.3.2014 for specified purposes, 31.12.2014 in so far as not already in force) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 2 para. 6(8); S.I. 2014/377, art. 2(1)(b), Sch. Pt. 2; S.I. 2014/3160, art. 2(1)(b)

61Sources of compensationU.K.

(1)This section applies to—

(a)compensation scheme orders,

(b)resolution fund orders,

(c)third party compensation orders, F395...

[F396(ca)bail-in compensation orders,]

(d)regulations under section 60[F397, and]

[F397(e)regulations under section 60A.]

(2)An order or regulations may provide for compensation or other payments to be made by—

(a)the Treasury,

(b)the Financial Services Compensation Scheme, [F398subject to section 214C of the Financial Services and Markets Act 2000 (limit on amount of special resolution regime payments),] or

(c)any other specified person.

Textual Amendments

F398Words in s. 61(2)(b) substituted (8.4.2010) by Financial Services Act 2010 (c. 28), s. 26(1)(l), Sch. 2 para. 41

Commencement Information

I90S. 61 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

62ProcedureU.K.

(1)This section applies to—

(a)compensation scheme orders,

(b)resolution fund orders, F399...

[F400(ba)bail-in compensation orders, and]

(c)third party compensation orders.

(2)An order—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Textual Amendments

Commencement Information

I91S. 62 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I92S. 62 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F401Independent valuer: valuation under section 6E or 48XU.K.

Textual Amendments

F401S. 62A and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 69

62A.Independent valuer: sections 6E and 48XU.K.

(1)The Bank of England must make arrangements for the appointment of a person to act as independent valuer for the purposes of a valuation to be conducted under section 6E or 48X.

[F402(1A)The Bank may require the bank to which the valuation relates to reimburse the Bank for costs it incurs in relation to the independent valuer (including remuneration and allowances paid to the valuer and the valuer's staff).]

(2)A person may not be appointed as independent valuer under subsection (1) unless that person—

(a)qualifies as “independent” in accordance with regulatory technical standards F403..., or

(b)if no such regulatory technical standards [F404exist], satisfies the independence requirement set out in section 1151 of the Companies Act 2006.

[F405(2A)In subsection (2) “regulatory technical standards” means—

(a)any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are [F406assimilated] law, or

(b)technical standards made under subsection (2B).

(2B)The Bank of England may make technical standards specifying the circumstances in which for the purposes of this section a person is to be considered independent from the Bank of England and the bank to which the valuation relates.]

(3)An independent valuer is to hold and vacate office in accordance with the terms of his or her appointment.

(4)An independent valuer may be removed from office only on the grounds of incapacity or serious misconduct.

(5)In the event of the death of an independent valuer, or an independent valuer being removed from office or resigning, a new independent valuer must be appointed by the Bank in accordance with this section.

(6)[F407Section] 55(1) to (5) and (7) to (10) F408... apply in relation to an independent valuer appointed in accordance with this section as they apply to an independent valuer appointed by virtue of section 54.]

Textual Amendments

F408Words in s. 62A(6) omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 17(3)(b)

[F409Resolution administratorU.K.

Textual Amendments

F409Ss. 62B-62E and cross-heading inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 70

62B.Resolution administratorU.K.

(1)The Bank of England may appoint an individual or body corporate as a resolution administrator.

(2)The power under subsection (1) may be exercised—

(a)by a separate instrument of appointment under this section, or

(b)by way of provision in a mandatory reduction instrument, a share transfer instrument, a property transfer instrument or a resolution instrument.

(3)In this section and sections 62C to 62E—

  • “appointment instrument” means an instrument under subsection (2)(a);

  • “Part 1 instrument” means an instrument of a kind mentioned in subsection (2)(b).

(4)A resolution administrator is appointed—

(a)to hold any securities that may be transferred or issued to that person in the capacity of resolution administrator, and

(b)to perform any other functions that may be conferred under any provision of this Part.

(5)The Bank of England may appoint more than one resolution administrator to perform functions in relation to a bank (but no more than one of them may at any one time be authorised to hold securities as mentioned in subsection (4)(a)).

(6)Securities held by a resolution administrator (in that capacity, and whether as a result of a Part 1 instrument or otherwise) are to be held in accordance with the terms of a Part 1 instrument that transfers those, or other, securities to the resolution administrator.

(7)For example, the following provision may be made by virtue of subsection (6)—

(a)provision that specified rights of a resolution administrator with respect to all or any of the securities are to be exercisable only as directed by the Bank of England;

(b)provision specifying rights or obligations that the resolution administrator is, or is not, to have in relation to some or all of the securities.

(8)A resolution administrator must—

(a)in accordance with the Part 1 instrument or the appointment instrument, take all measures necessary to promote the special resolution objectives, and

(b)have regard, in performing any functions of the office, to any other objectives that may be specified in a Part 1 instrument or the appointment instrument.

(9)Where one or more objectives are specified in accordance with subsection (8), the objectives are to be taken to have equal status with each other, unless the contrary is stated in the Part 1 instrument or the appointment instrument.

(10)The following provisions apply in relation to an appointment instrument as they apply in relation to a resolution instrument—

(a)section 48S(2) and (3) (power to make incidental, consequential provision etc);

(b)section 48T (procedure).

62C.Resolution administrator: further functionsU.K.

(1)An appointment instrument or a Part 1 instrument may—

(a)authorise a resolution administrator to manage the bank’s business (or confer on a resolution administrator any other power with respect to the management of the bank’s business);

(b)authorise a resolution administrator to exercise any other powers of the bank;

(c)confer on a resolution administrator any other power the Bank of England may consider appropriate;

(d)provide that the exercise of any power conferred by the instrument in accordance with this section is to be subject to conditions specified in the instrument.

(2)An appointment instrument or a Part 1 instrument may require a resolution administrator to make reports to the Bank of England—

(a)on any matter specified in the instrument, and

(b)at the times or intervals specified in the instrument.

(3)If an instrument specifies a matter in accordance with subsection (2)(a), it may provide for further requirements as to the contents of the report on that matter to be specified in an agreement between the Bank of England and the resolution administrator.

(4)An appointment instrument or a Part 1 instrument may—

(a)require a resolution administrator to consult specified persons before exercising specified functions (and may specify particular matters on which the specified person must be consulted);

(b)provide that a resolution administrator is not to exercise specified functions without the consent of a specified person.

62D.Resolution administrator: supplementaryU.K.

(1)A resolution administrator may do anything necessary or desirable for the purposes of or in connection with the performance of the functions of the office.

(2)A resolution administrator is not a servant or agent of the Crown (and, in particular, is not a civil servant).

(3)Where a resolution administrator is appointed under this Part, the Bank of England—

(a)must make provision in the appointment instrument or a Part 1 instrument for the resignation and replacement of the resolution administrator;

(b)may remove the resolution administrator from office only (i) on the ground of incapacity or misconduct, or (ii) on the ground that there is no further need for a person to perform the functions conferred on the resolution administrator.

62E.Resolution administrator: moneyU.K.

(1)An appointment instrument or a Part 1 instrument may provide for the payment of remuneration and allowances to a resolution administrator.

(2)Provision made under subsection (1) may provide that the amounts are—

(a)to be paid by the Bank of England, or

(b)to be determined by the Bank of England and paid by the bank.

(3)A resolution administrator is not liable for damages in respect of anything done in good faith for the purposes of or in connection with the functions of the office (subject to section 8 of the Human Rights Act 1998).]

Incidental functionsU.K.

63General continuity obligation: property transfersU.K.

(1)In this section and section 64—

(a)“residual bank” means a bank all or part of whose business has been transferred in accordance with section 11(2)(b)[F410, 12(2) [F411, 12ZA(3)] [F412, 41A(2) or 44D(2)]] ,

(b)“group company” means anything which is, or was immediately before the transfer, a group undertaking in relation to a residual bank,

(c)“group undertaking” has the meaning given by section 1161(5) of the Companies Act 2006 (interpretation),

(d)“the transferred business” means the part of the bank's business that has been transferred, and

(e)“transferee” means a commercial purchaser or [F413resolution company] to whom all or part of the transferred business has been transferred.

[F414(1A)In this section a reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors and (vii) a scheme of arrangement.]

(2)The residual bank and each group company must provide such services and facilities as are required to enable a transferee to operate the transferred business, or part of it, effectively.

(3)The duty under subsection (2) (the “continuity obligation”) may be enforced as if created by contract between the residual bank or group company and the transferee.

[F415(3A)The continuity obligation continues to apply despite the residual bank or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(2) of the Insolvency (Northern Ireland) Order 1989.]

(4)The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

[F416(4A)But if the services and facilities provided in pursuance of the continuity obligation were provided to the bank whose business has been transferred, under an agreement with that bank, before the property transfer instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and subsection (4) does not apply).]

(5)The continuity obligation is not limited to the provision of services or facilities directly to a transferee.

(6)The Bank of England may, with the consent of the Treasury, by notice to the residual bank or a group company state that in the Bank's opinion—

(a)specified activities are required to be undertaken in accordance with the continuity obligation;

(b)activities are required be undertaken in accordance with the continuity obligation on specified terms.

(7)A notice under subsection (6) shall be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

Textual Amendments

F412Words in s. 63(1)(a) substituted (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 13(3)

Commencement Information

I93S. 63 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

64Special continuity obligations: property transfersU.K.

(1)Expressions in this section have the same meaning as in section 63.

(2)The Bank of England may—

(a)cancel a contract or other arrangement between the residual bank and [F417a third party] (whether or not rights or obligations under it have been transferred to a transferee);

(b)modify the terms of a contract or other arrangement between the residual bank and [F418a third party] (whether or not rights or obligations under it have been transferred to a transferee);

(c)add or substitute a transferee as a party to a contract or other arrangement between the residual bank and [F419a third party];

(d)confer and impose rights and obligations on a group company and a transferee, which shall have effect as if created by contract between them;

(e)confer and impose rights and obligations on the residual bank and a transferee which shall have effect as if created by contract between them.

(3)In modifying or setting terms under subsection (2) the Bank of England shall aim, so far as is reasonably practicable, to preserve or include—

(a)provision for reasonable consideration, and

(b)any other provision that would be expected in arrangements concluded between parties dealing at arm's length.

[F420(4)The power under subsection (2) must be exercised by way of provision in a property transfer instrument (or supplemental instrument).

(5)The power in subsection (2)(d) and (e) may be exercised only—

(a)in so far as the Bank of England thinks it necessary to do so to ensure the provision of such services and facilities as are required to enable the transferee to operate the transferred business, or part of it, effectively, and

(b)with the consent of the Treasury.

(6)An obligation imposed on the residual bank or a group company under subsection (2)(d) or (e) continues to apply despite the residual bank or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(2) of the Insolvency (Northern Ireland) Order 1989.]

[F421(7)For the purposes of subsection (2), “third party” includes a group company.]

Textual Amendments

F420S. 64(4)-(6) substituted for s. 64(4) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 72(3)

Commencement Information

I94S. 64 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

65Continuity obligations: onward property transfersU.K.

(1)In this section—

(a)“onward transfer” means a transfer of property, rights or liabilities (whether or not under a power in this Part) from—

(i)a person who is a transferee under a property transfer instrument under section 12(2) [F422or 12ZA(3)] (an “original transferee”), or

(ii)a bank, securities issued by which were earlier transferred by [F423a share transfer instrument under section 12(2) or] a share transfer order under section 13(2), and

(b)the person to whom the onward transfer is made is referred to as an “onward transferee”.

(2)The continuity authority may—

(a)provide for an obligation under section 63 to apply in respect of an onward transferee;

(b)extend section 64 so as to permit action to be taken under section 64(2) for the purpose of enabling an onward transferee to operate transferred business, or part of it, effectively.

(3)“The continuity authority” means—

(a)the Bank of England, where subsection (1)(a)(i) applies, and

(b)the Treasury, where subsection (1)(a)(ii) applies.

(4)Subsection (2) may be relied on to impose obligations on—

(a)an original transferee (where the original transfer was a property transfer),

(b)a residual bank within the meaning of section 63 (where the original transfer was a property transfer),

(c)the bank (where the original transfer was a share transfer),

(d)anything which is or was a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) of anything within paragraphs (a) to (c), or

(e)any combination.

(5)Subsection (2) may be used to impose obligations—

(a)in addition to obligations under or by virtue of section 63 or 64, or

(b)replacing obligations under or by virtue of either of those sections to a specified extent.

(6)A power under subsection (2) is exerciseable by giving a notice to each person—

(a)on whom a continuity obligation is to be imposed under the power, or

(b)who is expected to benefit from a continuity obligation under the power.

(7)Sections 63(3) to (7) and 64(3) and (4) apply to an obligation as applied under subsection (2)—

(a)construing “transferred business” as the business transferred by means of the onward transfer, and

(b)with any other necessary modification.

(8)The Bank of England may act under or by virtue of subsection (2) only with the consent of the Treasury.

Textual Amendments

Commencement Information

I95S. 65 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

66General continuity obligation: share transfersU.K.

(1)In this section and section 67—

(a)“transferred bank” means a bank all or part of the ownership of which has been transferred in accordance with section 11(2)(a)[F424, 12(2)(a)] or 13(2)[F425, or which falls within subsection (1A)],

(b)“former group company” means anything which was a group undertaking in relation to the transferred bank immediately before the transfer (whether or not it is also a group undertaking in relation to the transferred bank immediately after the transfer),

(c)“group undertaking” has the meaning given by section 1161(5) of the Companies Act 2006 (interpretation), and

(d)“the continuity authority” means—

(i)the Bank of England, where ownership was transferred in accordance with section 11(2)(a)[F426, 12(2)(a)][F427, or in a case falling within subsection (1A)], and

(ii)the Treasury, where ownership was transferred in accordance with section 13(2).

[F428(1ZA)In this section a reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors and (vii) a scheme of arrangement.]

[F429(1A)A bank falls within this subsection if a [F430mandatory reduction instrument or] resolution instrument (or supplemental resolution instrument) has changed the ownership of the bank (wholly or partly) by providing for the transfer, cancellation or conversion from one form or class to another of securities issued by the bank (and the reference in subsection (1)(b) to “the transfer” includes such a cancellation or conversion).]

(2)Each former group company must provide such services and facilities as are required to enable the transferred bank to operate effectively.

(3)The duty under subsection (2) (the “continuity obligation”) may be enforced as if created by contract between the transferred bank and the former group company.

[F431(3A)The continuity obligation continues to apply despite the former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.]

(4)The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

[F432(4A)But if the services and facilities provided in pursuance of the continuity obligation were provided to the transferred bank, under an agreement with that bank, before the share transfer instrument or order or the resolution instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and subsection (4) does not apply).]

(5)The continuity obligation is not limited to the provision of services or facilities directly to the transferred bank.

(6)The continuity authority may by notice to a former group company state that in the authority's opinion—

(a)specified activities are required to be undertaken in accordance with the continuity obligation;

(b)activities are required be undertaken in accordance with the continuity obligation on specified terms.

(7)A notice under subsection (6) shall be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

(8)The Bank of England may act under or by virtue of subsection (6) only with the consent of the Treasury.

Textual Amendments

Commencement Information

I96S. 66 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

67Special continuity obligations: share transfersU.K.

(1)Expressions in this section have the same meaning as in section 66.

(2)The continuity authority may—

(a)cancel a contract or other arrangement between the transferred bank and [F433a third party];

(b)modify the terms of a contract or other arrangement between the transferred bank and [F434a third party];

(c)confer and impose rights and obligations on a former group company and the transferred bank, which shall have effect as if created by contract between them.

(3)In modifying or setting terms under subsection (2) the continuity authority shall aim, so far as is reasonably practicable, to preserve or include—

(a)provision for reasonable consideration, and

(b)any other provision that would be expected in arrangements concluded between parties dealing at arm's length.

[F435(4)The power under subsection (2) must be exercised by way of provision in a share transfer instrument or order or resolution instrument (or supplemental instrument or order).

(5)The power in subsection (2)(c) may be exercised—

(a)only in so far as the continuity authority thinks it necessary to do so to ensure the provision of such services and facilities as are required to enable the transferred bank to operate effectively, and

(b)by the Bank of England only with the consent of the Treasury.

(6)An obligation imposed on the transferred bank or a former group company under subsection (2)(b) or (c) continues to apply despite the transferred bank or former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(2) of the Insolvency (Northern Ireland) Order 1989.]

Textual Amendments

F435S. 67(4)-(6) substituted for s. 67(4) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 75(3)

Commencement Information

I97S. 67 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I98S. 67 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

68Continuity obligations: onward share transfersU.K.

(1)In this section “onward transfer” means a transfer (whether or not under a power in this Part) of securities issued by a bank where—

(a)securities issued by the bank were earlier transferred by [F436a share transfer instrument under section 12(2),] [F437a resolution instrument under section 12A(2) or supplemental resolution instrument under section 48U(2) or a] share transfer order under section 13(2), or

(b)the bank was the transferee under a property transfer instrument under section 12(2).

(2)The continuity authority may—

(a)provide for an obligation under section 66 to apply in respect of the bank after the onward transfer;

(b)extend section 67 so as to permit action to be taken under section 67(2) to enable the bank to operate effectively after the onward transfer.

(3)In this section “continuity authority” has the same meaning as in sections 66 and 67.

(4)Subsection (2) may be relied on to impose obligations on—

(a)the bank,

(b)anything which is or was a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) of the bank,

(c)anything which is or was a group undertaking of the residual bank (in a case to which subsection (1)(b) applies), or

(d)any combination.

(5)Subsection (2) may be used to impose obligations—

(a)in addition to obligations under or by virtue of section 66 or 67, or

(b)replacing obligations under or by virtue of either of those sections to a specified extent.

(6)A power under subsection (2) is exerciseable by giving a notice to each person—

(a)on whom a continuity obligation is to be imposed under the power, or

(b)who is expected to benefit from a continuity obligation under the power.

(7)Sections 66(3) to (7) and 67(3) and (4) apply to an obligation as applied under subsection (2) with any necessary modification.

(8)The Bank of England may act under or by virtue of subsection (2) only with the consent of the Treasury.

Textual Amendments

Commencement Information

I99S. 68 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

69Continuity obligations: consideration and termsU.K.

(1)The Treasury may by order specify matters which are to be or not to be considered in determining—

(a)what amounts to reasonable consideration for the purpose of sections 63 to 68;

(b)what provisions to include in accordance with section 64(3)(b) or 67(3)(b).

(2)An order—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(3)A continuity authority may give guarantees or indemnities in respect of consideration for services or facilities provided or to be provided in pursuance of a continuity obligation.

(4)In this section “continuity authority”—

(a)in relation to sections 63 and 64, means the Bank of England, and

(b)in relation to sections 65 to 68, has the same meaning as in those sections.

Commencement Information

I100S. 69 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I101S. 69 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

70Continuity obligations: terminationU.K.

(1)The continuity authority may by notice terminate an obligation arising under section 63 or 66.

(2)The power under subsection (1) is exerciseable by giving a notice to each person—

(a)on whom the obligation is imposed, or

(b)who has benefited or might have expected to benefit from the obligation.

(3)In this section “continuity authority”—

(a)in relation to section 63, means the Bank of England, and

(b)in relation to section 66, has the same meaning as in that section.

(4)A reference in subsection (1) to obligations under a section includes a reference to obligations under that section as applied under section 65 or 68.

Commencement Information

I102S. 70 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F43870A.Suspension of obligationsU.K.

(1)The Bank of England may suspend obligations to make a payment, or delivery, under a contract where one of the parties to the contract is a bank in respect of which the Bank is exercising a stabilisation power.

(2)A suspension imposed under subsection (1) does not apply to—

(a)payments of eligible deposits or eligible claims, or

(b)payments or deliveries to excluded persons.

(3)A suspension imposed under subsection (1)—

(a)begins when the instrument providing for the suspension is first published,

(b)must end no later than midnight at the end of the first business day following the day on which the instrument providing for the suspension is published, and

(c)subject to subsection (2), suspends all obligations to make a payment or delivery under the contract in question, whether the obligation concerned is that of the bank under resolution or of any other party to the contract.

(4)Where a payment or delivery under the contract concerned first fell due within the period of the suspension, that payment or delivery is treated as being due immediately on the expiry of the suspension.

(5)The power under subsection (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6)The Bank of England must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in subsection (1).

(7)In this section—

  • “eligible claim” means a claim in respect of which compensation is payable under the Financial Services Compensation Scheme F439...

  • “eligible deposit” means a deposit in respect of which the person, or any of the persons, to whom it is owed would be eligible for compensation under the Financial Services Compensation Scheme F440....

Textual Amendments

Modifications etc. (not altering text)

C9Ss. 70A-70C restricted (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 87 (with reg. 88)

C10S. 70A modified (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 89

C11Ss. 70A-70C modified (31.12.2020 immediately before IP completion day) by S.I. 2019/341, reg. 18(2) (as inserted by The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), regs. 1(2), 20(5); 2020 c. 1, Sch. 5 para. 1(1))

70B.Restriction of security interestsU.K.

(1)Where the Bank of England is exercising a stabilisation power in respect of bank, the Bank may suspend the rights of a secured creditor of the bank to enforce any security interest the creditor has in relation to any assets of the bank.

(2)A suspension under subsection (1)—

(a)begins when the instrument providing for the suspension is first published, and

(b)must end no later than midnight at the end of the first business day following the day on which that instrument is published.

(3)But the Bank of England may not suspend the rights of an excluded person to enforce any security interest that person may have in relation to any asset of the bank under resolution which has been pledged or provided to the excluded person in question as collateral or as cover for margin.

(4)The power under subsection (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(5)Where the power in subsection (1) is being exercised in a partial property transfer, the Bank of England must ensure that any restrictions on the enforcement of security interests which it imposes under that subsection are applied consistently for all banking group companies in respect of which the Bank is exercising a stabilisation power.

(6)The Bank of England must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in subsection (1).

(7)For the purposes of this section, a “security interest” means an interest or right held for the purpose of securing the payment of money or the performance of any other obligation.

Textual Amendments

Modifications etc. (not altering text)

C9Ss. 70A-70C restricted (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 87 (with reg. 88)

C11Ss. 70A-70C modified (31.12.2020 immediately before IP completion day) by S.I. 2019/341, reg. 18(2) (as inserted by The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), regs. 1(2), 20(5); 2020 c. 1, Sch. 5 para. 1(1))

70C.Suspension of termination rightsU.K.

(1)The Bank of England may suspend the termination right of any party to a qualifying contract (other than a party who is an excluded person).

(2)A contract is a “qualifying contract” for the purpose of this section if—

(a)one of the parties to the contract is a bank in respect of which the Bank is exercising a stabilisation power (a “bank under resolution”) and all the obligations under the contract to make a payment, make delivery or provide collateral continue to be performed, or

(b)one of the parties to the contract is a subsidiary undertaking of a bank under resolution and the condition in subsection (3) is met.

(3)The condition is that—

(a)the obligations of the subsidiary undertaking are guaranteed or otherwise supported by the bank under resolution,

(b)the termination rights under the contract are triggered by the insolvency or the financial condition of the bank under resolution, and

(c)if a property transfer instrument has been made in relation to the bank under resolution—

(i)all the assets and liabilities relating to the contract have been or are being transferred to, or assumed by, a single transferee, or

(ii)the Bank of England is providing adequate protection for the performance of the obligations of the subsidiary undertaking under the contract in any other way.

(4)The Bank of England must have regard to the impact a suspension might have on the orderly functioning of the financial markets before exercising the power in subsection (1).

(5)The power under subsection (1) must be exercised by way of provision in a share transfer instrument, property transfer instrument, resolution instrument or third-country instrument.

(6)A suspension imposed under subsection (1)—

(a)begins when the instrument providing for the suspension is first published, and

(b)must end no later than midnight at the end of the first business day following the day on which that instrument is published;

F441....

(7)A person may exercise a termination right under a contract before the expiry of the suspension if that person is given notice by the Bank of England that the rights and liabilities of the bank under resolution covered by the contract are not—

(a)to be transferred to another undertaking through the exercise of a stabilisation power, or

(b)to be made subject to a mandatory reduction instrument or a resolution instrument.

(8)If—

(a)no notice has been given by the Bank of England under subsection (7), and

(b)a termination right has been triggered otherwise than through the exercise of a stabilisation power or the imposition of a suspension under subsection (1) (or the occurrence of an event directly linked to the exercise of a stabilisation power),

a person may, on the expiry of the suspension, exercise the termination right in accordance with the terms of the contract.

(9)But, where the rights and liabilities of the bank under resolution or the subsidiary undertaking under the contract have been transferred to another undertaking, subsection (8) applies only if the event giving rise to the termination right has been triggered by that undertaking.

(10)For the purposes of this section, “termination right” means—

(a)a right to terminate a contract,

(b)a right to accelerate, close out, set-off or net obligations, or any similar provision that suspends, modifies or extinguishes an obligation of a party to the contract, or

(c)a provision that prevents an obligation from arising under the contract.

Textual Amendments

Modifications etc. (not altering text)

C9Ss. 70A-70C restricted (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 87 (with reg. 88)

C11Ss. 70A-70C modified (31.12.2020 immediately before IP completion day) by S.I. 2019/341, reg. 18(2) (as inserted by The Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/710), regs. 1(2), 20(5); 2020 c. 1, Sch. 5 para. 1(1))

70D.Suspension: general provisionsU.K.

(1)For the purposes of sections 70A to 70C—

  • “business day” means any day other than a Saturday, a Sunday, or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom;

  • “excluded person” means—

    (a)

    a person who has been declared to be, or who is an operator of, a designated system under regulation 4 of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999,

    (b)

    F442...

    (c)

    a recognised central counterparty F443... or third country central counterparty, or

    (d)

    a central bank.

(2)For the purposes of subsection (1) F444..., “recognised central counterparty” and “third country central counterparty” have the meaning given in section 285 of the Financial Services and Markets Act 2000.]

Textual Amendments

71PensionsU.K.

(1)This section applies to—

[F445(za)mandatory reduction instruments,]

(a)share transfer orders,

(b)share transfer instruments, F446...

(c)property transfer instruments[F447, and]

[F447(d)resolution instruments.]

(2)An order or instrument may make provision—

(a)about the consequences of a transfer for a pension scheme;

(b)about property, rights and liabilities of any pension scheme of the bank.

(3)In particular, an order or instrument may—

(a)modify any rights and liabilities;

(b)apportion rights and liabilities;

(c)transfer property of, or accrued rights in, one pension scheme to another (with or without consent).

(4)Provision by virtue of this section may (but need not) amend the terms of a pension scheme.

(5)A share or property transfer instrument may make provision in reliance on this section only with the consent of the Treasury.

(6)In this section—

(a)“pension scheme” includes any arrangement for the payment of pensions, allowances and gratuities, and

(b)a reference to a pension scheme of a bank is a reference to a scheme in respect of which the bank, or a group company of the bank, is or was an employer.

(7)In subsection (6)(b) the reference to a group company of the bank is a reference to anything that is or was a group undertaking in relation to the bank within the meaning given by section 1161(5) of the Companies Act 2006.

Textual Amendments

Commencement Information

I103S. 71 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I104S. 71 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

F44872EnforcementU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

73DisputesU.K.

(1)This section applies to—

[F449(za)mandatory reduction instruments,]

(a)share transfer orders,

(b)share transfer instruments, F450...

(c)property transfer instruments[F451, F452...

(d)resolution instruments][F453, and

(e)third-country instruments.]

(2)An order or instrument may include provision for disputes to be determined in a specified manner.

(3)Provision by virtue of subsection (2) may, in particular—

(a)confer jurisdiction on a court or tribunal;

(b)confer discretion on a specified person.

Textual Amendments

F452Word in s. 73(1)(c) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 80(1)(b)

F453S. 73(1)(e) and preceding word inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 80(1)(b)

Commencement Information

I105S. 73 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I106S. 73 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

74TaxU.K.

(1)The Treasury may by regulations make provision about the fiscal consequences of the exercise of [F454the power to make a mandatory reduction instrument or] a stabilisation power.

(2)Regulations may relate to—

(a)capital gains tax;

(b)corporation tax;

(c)income tax;

(d)inheritance tax;

(e)stamp duty;

(f)stamp duty land tax;

(g)stamp duty reserve tax.

(3)Regulations may apply to—

(a)anything done in connection with an instrument or order;

(b)things transferred or otherwise affected by virtue of an instrument or order;

(c)a transferor or transferee under an instrument or order;

(d)persons otherwise affected by an instrument or order.

(4)Regulations may—

(a)modify or disapply an enactment;

(b)provide for an action to have or not have specified consequences;

(c)provide for specified classes of property (including securities), rights or liabilities to be treated, or not treated, in a specified way;

(d)withdraw or restrict a relief;

(e)extend, restrict or otherwise modify a charge to tax;

(f)provide for matters to be determined by the Treasury in accordance with provision made by or in accordance with the regulations.

(5)Regulations may make provision for the fiscal consequences of the exercise of [F455the power to make a mandatory reduction instrument or] a stabilisation power in respect of things done—

(a)during the period of three months before the date on which [F456the power to make the mandatory reduction instrument or (as the case may be)] the stabilisation power is exercised, or

(b)on or after that date.

[F457(5A)Where the mandatory reduction provision required by section 6B is made in two or more mandatory reduction instruments, in subsection (5)(a) above the reference to the date on which the power to make the mandatory reduction instrument is exercised is, in relation to any of those instruments, a reference to the date on which the power is exercised to make the first of those instruments.]

(6)In relation to the exercise of a supplemental or onward instrument or order under section 26, 27, 28, 30, 42, 43[F458, 45, 48U or 48V], in subsection (5)(a) above “the stabilisation power” is a reference to the first stabilisation power in connection with which the supplemental or onward instrument or order is made.

(7)The Treasury may by order amend subsection (2) so as to—

(a)add an entry, or

(b)remove an entry.

(8)Regulations or an order under this section—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

Textual Amendments

Commencement Information

I107S. 74 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I108S. 74 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

75Power to change lawU.K.

(1)The Treasury may by order amend the law for the purpose of enabling the powers under this Part to be used effectively, having regard to the special resolution objectives.

(2)An order may be made—

(a)for the general purpose of the exercise of powers under this Part,

(b)to facilitate a particular proposed or possible use of a power, or

(c)in connection with a particular exercise of a power.

(3)An order under subsection (2)(c) may make provision which has retrospective effect in so far as the Treasury consider it necessary or desirable for giving effect to the particular exercise of a power under this Act in connection with which the order is made (but in relying on this subsection the Treasury shall have regard to the fact that it is in the public interest to avoid retrospective legislation).

(4)In subsection (1) “amend the law” means—

(a)disapply or modify the effect of a provision of an enactment (other than a provision made by or under this Act),

(b)disapply or modify the effect of a rule of law not set out in legislation, or

(c)amend any provision of an instrument or order made in the exercise of a stabilisation power.

(5)Provision under this section may relate to this Part as it applies—

(a)to banks,

(b)to building societies,

(c)to credit unions (by virtue of section 89), F459...

[F460(ca)to investment firms,]

F461(cb). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F462(cc)to third-country institutions,

(cd)to UK branches, or]

(d)to any combination.

(6)Specific powers under this Part are without prejudice to the generality of this section.

(7)An order—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(8)But if the Treasury think it necessary to make an order without complying with subsection (7)(b)—

(a)the order may be made,

(b)the order shall lapse unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made,

(c)the lapse of an order under paragraph (b) does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and

(d)the lapse of an order under paragraph (b) does not prevent the making of a new order (in new terms).

[F463(9)For the purposes of this section—

  • [F464“third-country institution” has the same meaning as in section 48Z;]

  • “UK branch” means a branch located in the United Kingdom of a third-country institution authorised for the purposes of the Financial Services and Markets Act 2000 by the PRA or the FCA.]

Textual Amendments

F459Word in s. 75(5) omitted (1.8.2014) by virtue of Financial Services Act 2012 (c. 21), ss. 101(4), 122(3) (with Sch. 20); S.I. 2014/1847, art. 2

Commencement Information

I109S. 75 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I110S. 75 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

TreasuryU.K.

76International obligation notice: generalU.K.

(1)The Bank of England may not exercise [F465the power to make a resolution administrator appointment instrument or a mandatory reduction instrument or] a stabilisation power in respect of a bank if the Treasury notify the Bank that the exercise would be likely to contravene an international obligation of the United Kingdom.

(2)A notice under subsection (1)—

(a)must be in writing, and

(b)may be withdrawn (generally, partially or conditionally).

(3)If the Treasury give a notice under subsection (1) the Bank of England must consider other exercises of [F466the power to make a resolution administrator appointment instrument or a mandatory reduction instrument or] the stabilisation powers with a view to—

(a)pursuing the special resolution objectives, and

(b)avoiding the objections on which the Treasury's notice was based.

(4)The Treasury may by notice to the Bank of England disapply subsection (3) in respect of a bank; and a notice may be revoked by further notice.

[F467(5)“Resolution administrator appointment instrument” means an instrument under section 62B(2)(a).]

Textual Amendments

Commencement Information

I111S. 76 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

77International obligation notice: [F468resolution company] U.K.

(1)This section applies where the Bank of England has transferred all or part of a bank's business to a [F469resolution company].

(2)The Bank of England must comply with any notice of the Treasury requiring the Bank, for the purpose of ensuring compliance by the United Kingdom with its international obligations—

(a)to take specified action under this Part in respect of the [F469resolution company], or

(b)not to take specified action under this Part in respect of the [F469resolution company].

(3)A notice under subsection (1)—

(a)must be in writing, and

(b)may be withdrawn (generally, partially or conditionally).

(4)A notice may include requirements about timing.

Textual Amendments

F468Words in s. 77 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 83(2)

Commencement Information

I112S. 77 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

78Public funds: generalU.K.

(1)The Bank of England may not exercise [F470the power to make a mandatory reduction instrument or] a stabilisation power in respect of a bank without the Treasury's consent if the exercise would be likely to have implications for public funds.

(2)In subsection (1)—

(a)“public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury, and

(b)action has implications for public funds if it would or might involve or lead to a need for the application of public funds.

(3)The Treasury may by order specify considerations which are to be, or not to be, taken into account in determining whether action has implications for public funds for the purpose of subsection (1).

(4)If the Treasury refuse consent under subsection (1), the Bank of England must consider other exercises of [F471the power to make a mandatory reduction instrument or] the stabilisation powers with a view to—

(a)pursuing the special resolution objectives, and

(b)avoiding the objections on which the Treasury's refusal was based.

(5)The Treasury may by notice to the Bank of England disapply subsection (4) in respect of a bank; and a notice may be revoked by further notice.

(6)An order under subsection (3)—

(a)shall be made by statutory instrument, and

(b)shall be subject to annulment in pursuance of a resolution of the House of Commons.

Textual Amendments

Commencement Information

I113S. 78 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I114S. 78 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F47278A.Pre-conditions for financial assistance: duty of Bank to give informationU.K.

(1)The Treasury may at any time require the Bank of England to inform them in writing whether or not a condition for financial assistance has been met in relation to a particular bank.

(2)“Condition for financial assistance” means a condition specified in—

(a)Article 37(10)(a) (financial assistance through government stabilisation tools), or

(b)Article 44(5)(a) (contributions to institution from resolution financing arrangement where [F473bail-in] liabilities have been excluded from bail-in),

of the recovery and resolution directive.

(3)If the Bank of England seeks the Treasury’s consent to the making of a mandatory reduction instrument or the exercise of a stabilisation power in accordance with section 78, the Bank must notify the Treasury in writing—

(a)whether or not the proposals involve action in relation to which a condition for financial assistance applies, and

(b)if the proposals do involve such action, whether or not the condition in question has been met.]

Textual Amendments

79Public funds: [F474resolution company] U.K.

(1)This section applies where the Bank of England has transferred all or part of a bank's business to a [F475resolution company].

(2)The Bank of England may not take action in respect of the [F475resolution company] without the Treasury's consent if the action would be likely to have implications for public funds.

(3)Section 78(2) and (3) have effect for the purposes of this section.

Textual Amendments

F474Words in s. 79 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 86(2)

Commencement Information

I115S. 79 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F47679APrivate sector purchaser: reportU.K.

(1)This section applies where the Bank of England sells all or part of a bank's business to a commercial purchaser.

(2)The Bank must report to the Chancellor of the Exchequer about the exercise of the power to make share transfer instruments and property transfer instruments under section 11(2).

(3)The report must comply with any requirements as to content specified by the Treasury.

(4)The report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer instrument made under section 11(2).]

Textual Amendments

80[F477Resolution company:] reportU.K.

(1)Where the Bank of England transfers all or part of a bank's business to a [F478resolution company], the Bank must report to the Chancellor of the Exchequer about the activities of the [F478resolution company].

(2)The first report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer to the [F478resolution company].

(3)A report must be made as soon as is reasonably practicable after the end of each subsequent year.

(4)The Chancellor of the Exchequer must lay a copy of each report under subsection (2) or (3) before Parliament.

(5)The Bank must comply with any request of the Treasury for a report dealing with specified matters in relation to a [F478resolution company].

(6)A request under subsection (5) may include provision about—

(a)the content of the report;

(b)timing.

Textual Amendments

F477Words in s. 80 heading substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 87(2)

Commencement Information

I116S. 80 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F47980ATransfer for bail-in purposes: reportU.K.

(1)This section applies where the Bank of England makes one or more resolution instruments under section 12A(2) in respect of a bank.

(2)The Bank of England must, on request by the Treasury, report to the Chancellor of the Exchequer about—

(a)the exercise of the power to make a resolution instrument under section 12A(2),

(b)the activities of the bank, and

(c)any other matters in relation to the bank that the Treasury may specify.

(3)In relation to the matters in subsection (2)(a) and (b), the report must comply with any requirements that the Treasury may specify.

(4)The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.]

Textual Amendments

81Temporary public ownership: reportU.K.

(1)Where the Treasury make one or more share transfer orders under section 13(2) in respect of a bank, the Treasury must lay before Parliament a report about the activities of the bank.

(2)The first report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first share transfer order.

(3)A report must be made as soon as is reasonably practicable after the end of each subsequent year.

(4)The obligation to produce reports continues to apply in respect of each year until the first during which no securities issued by the bank are owned by—

(a)a company wholly owned by the Treasury, or

(b)a nominee of the Treasury.

Commencement Information

I117S. 81 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F48081AAccounting information to be included in reports under sections 80[F481, 80A(2)(b) and 81] U.K.

(1)A report under section 80(1)[F482, 80A(2)(b) or 81] must include accounting information in respect of the bank or [F483resolution company] that is the subject of the report.

(2)In this section “accounting information” means—

(a)a balance sheet that, in the opinion of the person making the report, gives a true and fair view of the state of affairs of the bank or [F483resolution company] as at the reporting date, and

(b)a profit and loss account that, in the opinion of the person making the report, gives a true and fair view of the profit or loss of the bank or [F483resolution company] for the reporting period.

(3)In this section—

(a)“reporting period” means the period to which the report relates, and

(b)“reporting date” means the last day of the reporting period.]

Textual Amendments

[F484Groups]U.K.

Textual Amendments

F484S. 82 cross-heading substituted (1.8.2014) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1847, art. 2

[F48581AA.Cases where mandatory write-down, conversion etc applies: banking group companiesU.K.

(1)Section 6B (mandatory write-down, conversion, etc. of capital instruments [F486and relevant internal liabilities]) applies in relation to a banking group company in the cases set out in subsections (2), (4) [F487, (8) and (8A)].

(2)Case 1 is where—

(a)the conditions imposed by section 81B or 81ZBA on the exercise of a stabilisation power in accordance with section 11(2), 12(2) or 12ZA(3) are met in respect of the banking group company,

(b)the Bank of England has decided to exercise the stabilisation power,

(c)if the banking group company—

(i)is a financial institution which is a subsidiary of an institution (within the meaning of [F488Article 4.1A of the capital requirements regulation]) (“the parent institution”), but

(ii)is not an entity within [F489subsection (2A)],

the requirements of subsection (3) are met, and

(d)section 12AA (mandatory write-down etc in bail-in cases) does not apply in relation to the banking group company by virtue of the exercise of a power under section 81BA (bail-in: banking group company).

[F490(2A)The entities covered by subsection (2)(c)(ii) are—

(a)an entity of any of the following kinds which is established in the United Kingdom—

(i)a financial holding company;

(ii)a mixed financial holding company;

(iii)a mixed-activity holding company;

(b)a UK parent financial holding company or a UK parent mixed financial holding company,

and expressions used in this subsection have the same meaning as in the capital requirements regulation.]

(3)For the purposes of subsection (2)(c)—

(a)the first requirement is that—

(i)the appropriate authority is satisfied that Condition 1 in section 7 is met in relation to the banking group company, and

(ii)the Bank of England is satisfied that Conditions 2, 3 and 4 of that section are met in relation to that company;

(b)the second requirement is that—

(i)where the parent institution is a bank, the PRA is satisfied that Condition 1 in section 7 is met, and the Bank of England is satisfied that Conditions 2, 3 and 4 in that section are met in relation to the parent institution,

(ii)F491... and

(iii)where the parent institution is a third-country institution, subsection (7) applies in relation to the banking group company by reason of that third country institution.

(4)Case 2 is where—

(a)the appropriate authority is satisfied that Condition 1 in section 7 is met in respect of the banking group company,

(b)the Bank of England is satisfied that—

(i)(ignoring section 6B) Condition 2 in section 7 is met, and

(ii)that Condition will continue to be met unless the action required by section 6B is taken in respect of the banking group company, and

(c)one of subsections (5) F492... or (7) apply in relation to the banking group company.

(5)This subsection applies in relation to the banking group company if—

(a)the PRA is satisfied that Condition 1 in section 7 is met in respect of a bank to which section 81D(1)(a) applies, and

(b)the Bank of England is satisfied that (ignoring section 6B) Condition 2 in section 7 is met in relation to that bank.

F493(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)This subsection applies in relation to the banking group company if the relevant third-country authority has determined that any conditions required by the law of the third country to be met before—

(a)any power for the relevant third country authority to write down or convert capital instruments [F494or relevant internal liabilities] provided for under the law of that third country may be exercised, or

(b)third-country resolution action may be taken,

are met in relation to a third-country institution to which section 81D(1)(a) applies.

(8)Case 3 is where—

(a)extraordinary public financial support is required by the banking group company other than in circumstances where subsection (5E) of section 7 applies by virtue of paragraph (c) of that subsection, and

(b)the Bank of England is satisfied F495... that, in order for a bank F496... which is a member of the same group as the banking group company to fulfil its own funds requirements, relevant capital instruments [F497or relevant internal liabilities] of the banking group company need to be written down or converted into Common Equity Tier 1 instruments (or both).

[F498(8A)Case 4 is where—

(a)the banking group company is (or, but for the exercise of a stabilisation power, would be) a parent undertaking of a bank from which it has purchased (directly or indirectly) relevant capital instruments or relevant internal liabilities,

(b)the banking group company is not a resolution entity,

(c)the relevant capital instruments or relevant internal liabilities of the banking group company have been purchased (directly or indirectly) by a resolution entity in the same resolution group as the banking group company,

(d)any of the cases provided for in section 6A applies to the bank referred to in paragraph (a) above, and

(e)none of cases 1 to 3 in this section applies to the banking group company.]

(9)For the purposes of determining if the matters set out in subsections (3) to (7) are satisfied, the FCA, PRA, Bank of England F499... or relevant third-country authority (as the case may be) may ignore any transfer of losses or capital made between members of the group.

(10)For the purposes of subsections (3)(a) and (b), (4), (5) and (8)—

(a)references in section 7 to the bank are to be read—

(i)in the case of subsections (3)(a) and (b), (4) and (5), as references to the banking group company, and

(ii)in the case of subsection (8), as references to the banking group company or the parent institution (as the case may be), and

(b)section 7(5C)(a) is to be ignored in determining whether Condition 1 in that section is met in relation to the banking group company where that company is not a UK authorised person.

(11)For the purposes of subsections (3), (4) and (5), the “appropriate authority” means—

(a)in the case of a banking group company which is a PRA-authorised person, the PRA;

(b)in the case of a banking group company which is a UK authorised person but not a PRA-authorised person, the FCA;

(c)in the case of a banking group company which is not an UK authorised person—

F500(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F500(ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii)if [F501the parent undertaking of the group is not a UK authorised person and] there is a PRA-authorised person in the group, the PRA; and

(iv)in all other cases, the Bank of England.

(12)Where the PRA is the “appropriate authority” under subsection (11) in relation to a banking group company in the same group as a UK authorised person which is not a PRA-authorised person, the PRA must consult the FCA before making any decision as to whether the conditions referred to in subsection (3)(a), (4)(a) or (5)(a) (the “relevant conditions”) are satisfied.

(13)Where the FCA is the “appropriate authority” under subsection (11) in relation to a banking group company in the same group as a PRA-authorised person, the FCA must consult the PRA before making any decision as to whether the relevant conditions are satisfied.

(14)For the purposes of this section—

  • F502...

  • F502...

  • F502...

  • F502...

  • “financial institution” has the [F503same meaning as in the capital requirements regulation];

  • [F504“parent undertaking” has the meaning given in Article 4.1(15)(a) of the capital requirements regulation;]

  • “PRA-authorised person” has the meaning given in section 2B(5) of the Financial Services and Markets Act 2000;

  • “relevant third-country authority” [F505means an authority in a country or territory other than the United Kingdom which has functions corresponding to those of the Bank of England, the FCA or the PRA, in relation to bank recovery and resolution];

  • “third-country institution” has the meaning given in section 89H(7);

  • “third-country resolution action” has the meaning given in section 89H(7);

  • “UK authorised person” has the same meaning as in section 105(8) of the Financial Services and Markets Act 2000.]

Textual Amendments

F495Words in s. 81AA(8)(b) omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 18

[F50681BSale to commercial purchaser and transfer to bridge bankU.K.

(1)The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 11(2) or 12(2) if the following conditions are met.

[F507(2)Condition 1 is that—

(a)the PRA is satisfied that Condition 1 of the general conditions is met in respect of a bank in the same group and the Bank of England is satisfied that Conditions 2, 3 and 4 of the general conditions are met in respect of that bank, or

F508(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)a relevant third-country authority of a third-country institution in the same group is satisfied that any conditions required by the law of the third country to be met before third-country resolution action may be taken are met in relation to that third-country institution.

(2A)For the purposes of determining if a requirement of Condition 1 is met, the PRA, Bank of England F509... or relevant third-country authority (as the case may be) may ignore any transfer of losses or capital made between members of the group.]

(3)Condition 2 (which does not apply in a financial assistance case) is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the [F510public interest in the advancement of one or more of the special resolution objectives.]

(4)Condition 3 (which applies only in a financial assistance case) is that—

(a)the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and

(b)in the Bank's opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection.

(5)Condition 4 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(6)Before determining whether Condition 2 or 3 (as appropriate) is met, the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(7)In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

(8)In this section “financial assistance case” means a case in which the Treasury notify the Bank of England that they have provided financial assistance in respect of a bank in the same group for the purpose of resolving or reducing a serious threat to the stability of the financial systems of the United Kingdom.

[F511(9)In this section—

  • F512...

  • F512...

  • “the general conditions” means the general conditions for the exercise of a stabilisation power set out in section 7;

  • “relevant third-country authority” has the meaning given by [F513section 81AA(14)];

  • “third-country institution” has the meaning given by section 89H(7);

  • “third-country resolution action” has the meaning given by section 89H(7).]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

F507S. 81B(2)(2A) substituted for s. 81B(2) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 90(2)

Modifications etc. (not altering text)

C12S. 81B modified (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 92(1)

[F51481ZZBA.Sale to commercial purchaser and transfer to bridge bank: supplemental powers in relation to certain holding companiesU.K.

(1)Without prejudice to the operation of section 81B, the Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 11(2) or 12(2) if the following conditions are met.

(2)Condition 1 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(3)Condition 2 is that the banking group company is an entity within [F515subsection (2A) of section 81AA].

(4)Condition 3 is that the PRA is satisfied that the banking group company is failing or likely to fail.

(5)Condition 4 is that the Bank of England is satisfied that, having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the banking group company that will result in Condition 3 ceasing to be met.

(6)Condition 5 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in the advancement of one or more of the special resolution objectives.

(7)Condition 6 is that the Bank of England is satisfied that one or more of the special resolution objectives would not be met to the same extent by the winding up of the banking group company.

(8)Condition 7 (which applies only in a financial assistance case) is that—

(a)the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and

(b)in the Bank of England’s opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection.

(9)In exercising a stabilisation power in reliance on this section, the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

(10)In this section “financial assistance case” has the meaning given in section 81B(8).

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

81ZZBB.Assessment of conditions for section 81ZZBAU.K.

(1)This section applies for the purposes of section 81ZZBA.

(2)The PRA must treat Condition 3 as met if satisfied that it would be met but for financial assistance provided by—

(a)the Treasury, or

(b)the Bank of England,

disregarding ordinary market assistance offered by the Bank of England on its usual terms.

(3)The Bank of England must treat Condition 4 as met if satisfied that it would be met but for financial assistance of the kind mentioned in subsection (2).

(4)For the purposes of Condition 3, a banking group company is failing or likely to fail if—

(a)it is contravening or likely to contravene a regulatory requirement where that contravention is serious in nature or directly related to a deterioration in the financial situation of the banking group company which threatens the viability of—

(i)the banking group company, or

(ii)another undertaking in the same resolution group,

(b)it is failing, or is likely to fail, to meet the approval conditions set out in section 192R(3) to (6) of the Financial Services and Markets Act 2000 in circumstances where that failure—

(i)would justify the taking of measures in relation to the company by the PRA under section 192T(1) of that Act, and

(ii)is serious in nature,

(c)the value of the assets of the banking group company is less than the amount of its liabilities,

(d)the banking group company is unable to pay its debts or other liabilities as they fall due,

(e)paragraph (c) or (d) (or both) will, in the near future, apply to the banking group company, or

(f)extraordinary public financial support is required in respect of the banking group company and subsection (5) does not apply to it.

(5)This subsection applies where, in order to remedy a serious disturbance in the economy of the United Kingdom and preserve financial stability, the extraordinary financial support takes any of the following forms—

(a)a State guarantee to back liquidity facilities provided by [F516the Bank of England],

(b)a State guarantee of newly issued liabilities,

(c)an injection of own funds, or purchase of capital instruments or liabilities, at prices and on terms that do not confer an advantage upon the banking group company, where none of the circumstances referred to in subsection (4)(a), (b), (c), (d) or (e) are present at the time the public support is granted and none of Cases 1 to 4 in section 6A apply.

(6)Before determining that Condition 3 is met, the PRA must consult the Bank of England.

(7)Before determining whether or not Conditions 4 and (where applicable) 7 are met, the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(8)Before determining that Conditions 5 and 6 are met the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(9)The special resolution objectives are not relevant to Conditions 3 and 4.

(10)In this section “regulatory requirement” means a requirement imposed—

(a)by or under the Financial Services and Markets Act 2000,

(b)by or under the capital requirements regulation [F517including any [F518assimilated] law that was originally made under Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26th June 2013 on prudential requirements for credit institutions and investment firms],

(c)by any enactment which [F519was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures or any [F520assimilated] law originally] made under that directive, or

(d)by the Bank of England under this Act,

and for the purposes of this definition, “capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

[F52181ZBA.Transfer to asset management vehicleU.K.

(1)The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12ZA(3) if the following conditions are met.

(2)Condition 1 is that—

(a)the PRA is satisfied that Condition 1 of the general conditions is met in respect of a bank in the same group and the Bank of England is satisfied that Conditions 2, 3 and 4 of the general conditions are met in respect of that bank, or

F522(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)a relevant third-country authority of a third-country institution in the same group is satisfied that any conditions required by the law of the third country to be met before third-country resolution action may be taken are met in relation to that third-country institution.

(2A)For the purposes of determining if a requirement of Condition 1 is met, the PRA, Bank of England F523... or relevant third-country authority (as the case may be) may ignore any transfer of losses or capital made between members of the group.

(3)Condition 2 is that the power is exercised in connection with the exercise of one or more stabilisation powers in respect of the banking group company otherwise than for the purposes of the third stabilisation option.

(4)Condition 3 (which does not apply in a financial assistance case) is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary having regard to the public interest in the advancement of one or more of the special resolution objectives.

(5)Condition 4 (which applies only in a financial assistance case) is that—

(a)the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and

(b)in the Bank of England’s opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection.

(6)Condition 5 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(7)Condition 6 is that the Bank of England is satisfied that—

(a)the situation of the market for the assets which it is proposed to transfer by the exercise of the stabilisation power is of such a nature that the liquidation of those assets under normal insolvency proceedings could have an adverse effect on one or more financial markets,

(b)the transfer is necessary to ensure the proper functioning of the banking group company from which the transfer is to be made, or

(c)the transfer is necessary to maximise the proceeds available for distribution.

(8)Before determining whether Conditions 2 and 5 and Condition 3 or 4 (as appropriate) are met, and if so how to react, the Bank of England must consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(9)For the purposes of this section—

  • “financial assistance case” has the meaning given by section 81B(8);

  • F524...

    and the definitions in section 81B(9) apply.]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

Modifications etc. (not altering text)

C13S. 81ZBA modified (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 92(2)

[F52581ZBB.Transfer to asset management vehicle: supplemental powers in relation to certain holding companiesU.K.

(1)Without prejudice to the operation of section 81ZBA, the Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12ZA(3) if the following conditions are met.

(2)Condition 1 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(3)Condition 2 is that the banking group company is an entity within [F526subsection (2A) of section 81AA].

(4)Condition 3 is that the PRA is satisfied that the banking group company is failing or likely to fail.

(5)Condition 4 is that the Bank of England is satisfied that, having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the banking group company that will result in Condition 3 ceasing to be met.

(6)Condition 5 is that the power is exercised in connection with the exercise of one or more stabilisation powers in respect of the banking group company otherwise than for the purposes of the third stabilisation option.

(7)Condition 6 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in the advancement of one or more of the special resolution objectives.

(8)Condition 7 is that the Bank of England is satisfied that one or more of the special resolution objectives would not be met to the same extent by the winding up of the banking group company.

(9)Condition 8 (which applies only in a financial assistance case) is that—

(a)the Treasury have recommended the Bank of England to exercise a stabilisation power on the grounds that it is necessary to protect the public interest, and

(b)in the Bank of England’s opinion, exercise of the power in respect of the banking group company is an appropriate way to provide that protection.

(10)Condition 9 is that the Bank of England is satisfied that—

(a)the situation of the market for the assets which it is proposed to transfer by the exercise of the stabilisation power is of such a nature that the liquidation of those assets under normal insolvency proceedings could have an adverse effect on one or more financial markets,

(b)the transfer is necessary to ensure the proper functioning of the banking group company from which the transfer is to be made, or

(c)the transfer is necessary to maximise the proceeds available for distribution.

(11)In this section—

  • “financial assistance case” has the meaning given in section 81B(8); F527...

  • F528...

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

81ZBC.Assessment of conditions for section 81ZBBU.K.

(1)This section applies for the purposes of section 81ZBB.

(2)The PRA must treat Condition 3 as met if satisfied that it would be met but for financial assistance provided by—

(a)the Treasury, or

(b)the Bank of England,

disregarding ordinary market assistance offered by the Bank of England on its usual terms.

(3)The Bank of England must treat Condition 4 as met if satisfied that it would be met but for financial assistance of the kind mentioned in subsection (2).

(4)For the purposes of Condition 3, a banking group company is failing or likely to fail if—

(a)it is contravening or likely to contravene a regulatory requirement where that contravention is serious in nature or directly related to a deterioration in the financial situation of the banking group company which threatens the viability of—

(i)the banking group company, or

(ii)another undertaking in the same resolution group,

(b)it is failing, or is likely to fail, to meet the approval conditions set out in section 192R(3) to (6) of the Financial Services and Markets Act 2000 in circumstances where that failure—

(i)would justify the taking of measures in relation to the company by the PRA under section 192T(1) of that Act, and

(ii)is serious in nature,

(c)the value of the assets of the banking group company is less than the amount of its liabilities,

(d)the banking group company is unable to pay its debts or other liabilities as they fall due,

(e)paragraph (c) or (d) (or both) will, in the near future, apply to the banking group company, or

(f)extraordinary public financial support is required in respect of the banking group company and subsection (5) does not apply to it.

(5)This subsection applies where, in order to remedy a serious disturbance in the economy of the United Kingdom and preserve financial stability, the extraordinary financial support takes any of the following forms—

(a)a State guarantee to back liquidity facilities provided by [F529the Bank of England],

(b)a State guarantee of newly issued liabilities,

(c)an injection of own funds, or purchase of capital instruments, at prices and on terms that do not confer an advantage upon the banking group company, where none of the circumstances referred to in subsection (4)(a), (b), (c), (d) or (e) are present at the time the public support is granted and none of Cases 1 to 4 in section 6A apply.

(6)Before determining that Condition 3 is met, the PRA must consult the Bank of England.

(7)Before determining whether or not Conditions 4, 5 and (where applicable) 8 are met, the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(8) Before determining that Conditions 6 and 7 are met the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(9)The special resolution objectives are not relevant to Conditions 3 and 4.

(10)In this section “regulatory requirement” means a requirement imposed—

(a)by or under the Financial Services and Markets Act 2000,

(b)by or under the capital requirements regulation [F530including any [F531assimilated] law that was originally made under Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26th June 2013 on prudential requirements for credit institutions and investment firms],

(c)by any enactment which [F532was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures or any [F533assimilated] law originally] made under that directive, or

(d)by the Bank of England under this Act,

and for the purposes of this definition, “capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

[F53481BABail-in optionU.K.

(1)The Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12A(2) if the following conditions are met.

[F535(2)Condition 1 is that either—

(a)the PRA is satisfied that Condition 1 of the general conditions is met in respect of a bank in the same group and the Bank of England is satisfied that Conditions 2, 3 and 4 of the general conditions are met in respect of that bank, or

F536(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)a relevant third-country authority of a third-country institution in the same group is satisfied that any conditions required by the law of the third country to be met before third-country resolution action may be taken are met in relation to that third-country institution.

(2A)For the purposes of determining if a requirement of Condition 1 is met, the PRA, Bank of England F537... or relevant third-country authority (as the case may be) may ignore any transfer of losses or capital made between members of the group.]

(3)Condition 2 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the [F538public interest in the advancement of one or more of the special resolution objectives.]

(4)Condition 3 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(5)Before determining whether Condition 2 is met, and if so how to react, the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(6)In exercising a stabilisation power in reliance on this section the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

[F539(7)The definitions in section 81B(9) apply for the purposes of this section.]]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

F535S. 81BA(2)(2A) substituted for s. 81BA(2) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 92(2)

Modifications etc. (not altering text)

C14S. 81BA modified (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 92(3)

[F54081BB.Bail-in option: supplemental powers in relation to certain holding companiesU.K.

(1)Without prejudice to the operation of section 81BA, the Bank of England may exercise a stabilisation power in respect of a banking group company in accordance with section 12A(2) if the following conditions are met.

(2)Condition 1 is that the banking group company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(3)Condition 2 is that the banking group company is an entity within [F541subsection (2A) of section 81AA].

(4)Condition 3 is that the PRA is satisfied that the banking group company is failing or likely to fail.

(5)Condition 4 is that the Bank of England is satisfied that, having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the banking group company that will result in Condition 3 ceasing to be met.

(6)Condition 5 is that the Bank of England is satisfied that the exercise of the power in respect of the banking group company is necessary, having regard to the public interest in the advancement of one or more of the special resolution objectives.

(7)Condition 6 is that the Bank of England is satisfied that one or more of the special resolution objectives would not be met to the same extent by the winding up of the banking group company.

(8)In exercising a stabilisation power in reliance on this section, the Bank of England must have regard to the need to minimise the effect of the exercise of the power on other undertakings in the same group.

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

81BC.Assessment of conditions for section 81BBU.K.

(1)This section applies for the purposes of section 81BB.

(2)The PRA must treat Condition 3 as met if satisfied that it would be met but for financial assistance provided by—

(a)the Treasury, or

(b)the Bank of England,

disregarding ordinary market assistance offered by the Bank of England on its usual terms.

(3)The Bank of England must treat Condition 4 as met if satisfied that it would be met but for financial assistance of the kind mentioned in subsection (2).

(4)For the purposes of Condition 3, a banking group company is failing or likely to fail if—

(a)it is contravening or likely to contravene a regulatory requirement where that contravention is serious in nature or directly related to a deterioration in the financial situation of the banking group company which threatens the viability of—

(i)the banking group company, or

(ii)another undertaking in the same resolution group,

(b)it is failing, or is likely to fail, to satisfy the approval conditions set out in section 192R(3) to (6) of the Financial Services and Markets Act 2000 in circumstances where that failure—

(i)would justify the taking of measures in relation to the company by the PRA under section 192T(1) of that Act, and

(ii)is serious in nature,

(c)the value of the assets of the banking group company is less than the amount of its liabilities,

(d)the banking group company is unable to pay its debts or other liabilities as they fall due,

(e)paragraph (c) or (d) (or both) will, in the near future, apply to the banking group company, or

(f)extraordinary public financial support is required in respect of the banking group company and subsection (5) does not apply to it.

(5)This subsection applies where, in order to remedy a serious disturbance in the economy of the United Kingdom and preserve financial stability, the extraordinary financial support takes any of the following forms—

(a)a State guarantee to back liquidity facilities provided by [F542the Bank of England],

(b)a State guarantee of newly issued liabilities,

(c)an injection of own funds, or purchase of capital instruments, at prices and on terms that do not confer an advantage upon the banking group company, where none of the circumstances referred to in subsection (4)(a), (b), (c), (d) or (e) are present at the time the public support is granted and none of Cases 1 to 4 in section 6A apply.

(6)Before determining that Condition 3 is met, the PRA must consult the Bank of England.

(7)Before determining whether or not Condition 4 is met, the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(8)Before determining that Conditions 5 and 6 are met the Bank of England must consult—

(a)the Treasury,

(b)the PRA, and

(c)the FCA.

(9)The special resolution objectives are not relevant to Conditions 3 and 4.

(10)In this section “regulatory requirement” means a requirement imposed—

(a)by or under the Financial Services and Markets Act 2000,

(b)by or under the capital requirements regulation [F543including any [F544assimilated] law that was originally made under Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26th June 2013 on prudential requirements for credit institutions and investment firms],

(c)by any enactment which [F545was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures or any [F546assimilated] law originally] made under that directive, or

(d)by the Bank of England under this Act,

and for the purposes of this definition, “capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC.]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

81C[F547Sections 81AA to 81ZBB: supplemental]U.K.

(1)In the following provisions references to banks include references to banking group companies—

(a)section 10(1), F548...

[F549(aa)section 48Z, and]

(b)section 75(5)(a).

[F550(1A)Where section 6B applies to a banking group company by virtue of section 81AA, sections 6B to 6D apply with the following modifications—

(a)references to the bank are to be read as references to the banking group company,

[F551(aa)where Case 4 in section 81AA applies, section 6B(2) is to be read as providing that “the mandatory reduction provision” is provision which, together with the mandatory reduction provision made in respect of any other subsidiary of the resolution entity that is in the same resolution group as the banking group company, produces the results referred to in subsection (1AA) of this section,]

(b)in section 6B, in subsection (8) the reference to section 6A is to be read as a reference to section 81AA and subsection (9) is to be ignored,

(c)in sections 6B and 6C references, which (by virtue of paragraph (a)) are read as references to a UK parent undertaking of a banking group company, include, where the banking group company satisfied section 81D(1)(a) by reference to a bank which is not a UK parent undertaking of the banking group company, a reference to that bank,

(d)for the purposes of section 6D, references to a bank in sections 48L(3), 48O and 48T are to be read as references to the banking group company, and, where the banking group company satisfied section 81D(1)(a) by reference to a bank (“the failing bank”), those references to a bank (except the first reference in section 48T(1)) are also to be read as including a reference to the failing bank.

[F552(1AA)The results are that—

(a)the principal amount of the relevant capital instruments or relevant internal liabilities of the banking group company is reduced, or

(b)such instruments or liabilities of the banking group company are converted (directly or indirectly) into Common Equity Tier 1 instruments,

(or both (a) and (b)) in accordance with the principle that losses of the bank referred to in relation to that banking group company in section 81AA(8A)(a) are effectively passed on to, and the bank is recapitalised by, the resolution entity that is in the same resolution group as the banking group company.]

(1B)Where the Bank of England makes a mandatory reduction instrument in respect of a banking group company, section 6E applies (with any necessary modifications) as if the banking group company were a bank.]

(2)Where the Bank of England exercises a stabilisation power in respect of a banking group company in reliance on section 81B [F553, 81ZZBA, 81ZBA or 81ZBB], the provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 [F554, 8 and 8ZA]) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.

(3)For the purposes of the application of section 143 (grounds for applying for bank administration order), the reference in subsection (2) to the Bank of England exercising a stabilisation power includes a case where the Bank of England intends to exercise such a power.

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

F548Word in s. 81C(1)(a) omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 93(2)(a)

[F55581CASection 81BA [F556and Section 81BB]: supplementalU.K.

(1)This section applies where the Bank of England has power under section 81BA [F557or section 81BB] to exercise a stabilisation power in respect of a banking group company.

(2)The provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except [F558section 7]) and any other enactment apply (with any necessary modifications) as if the banking group company were a bank.

(3)Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2) (“the bank”)—

(a)the provisions in this Act relating to resolution instruments are to be read in accordance with the general rule in subsection (4), but

(b)that is subject to the modifications in subsection (5);

and provisions in this Act and any other enactment are to be read with any modifications that may be necessary as a result of paragraphs (a) and (b).

(4)The general rule is that the provisions in this Act relating to resolution instruments (including supplemental resolution instruments) are to be read (so far as the context permits)—

(a)as applying in relation to the bank as they apply in relation to the parent undertaking, and

(b)so, in particular, as allowing any provision that may be made in a resolution instrument in relation to the parent undertaking to be made (also or instead) in relation to the bank.

(5)Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank F559[F560... or third-country institution mentioned in section 81BA(2) (“the group entity”)] —

(a)section 41A (transfer of property subsequent to resolution instrument) applies as if the reference in subsection (2) to the bank were to the parent undertaking, the bank and any other bank which is or was in the same group;

(b)section 48V (onward transfer)—

(i)applies as if the references in subsection (3) to “the bank” [F561included the group entity,] the parent undertaking and any other bank which is or was in the same group, and with the omission of subsection (4) of that section, and

(ii)is to be read as permitting the transfer of securities only if they are held by (or for the benefit of) the parent undertaking or a subsidiary company of the parent undertaking;

(c)section 48W (reverse transfer) applies as if the references in subsections (2) and (3) to “the bank” [F562included the group entity,] the parent undertaking and any other bank which is or was in the same group.

(6)Where section 48B (special bail-in provision) applies in accordance with subsection (4) (so that section 48B applies in relation to the bank mentioned in section 81BA(2) as it applies in relation to the parent undertaking mentioned in subsection (3)), the provision that may be made in accordance with section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes provision replacing a liability (of any form) of that bank with a security (of any form or class) of the parent undertaking.

(7)Where the banking group company mentioned in subsection (1) is a parent undertaking of the bank mentioned in section 81BA(2)—

(a)section 214B of the Financial Services and Markets Act 2000 (contribution to costs of special resolution regime) applies, and

(b)the reference in subsection (1)(b) of that section to the bank, and later references in that section, are treated as including references to any other bank which is a subsidiary undertaking of the parent undertaking (but not the parent undertaking itself).]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

F561Words in s. 81CA(5)(b)(i) substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 94(3)(b)

81DInterpretation: “banking group company” &c.U.K.

(1)In this Part “banking group company” means an undertaking—

(a)which is (or, but for the exercise of a stabilisation power, would be) in the same group as a bank F563[F564... or third-country institution (within the meaning of section [F56581AA(14)])], and

(b)in respect of which any conditions specified in an order made by the Treasury are met.

(2)An order may require the Bank of England to consult specified persons before determining whether the conditions are met.

(3)An order—

(a)is to be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(4)If an order contains a statement that the Treasury are of the opinion that, by reason of urgency, it is necessary to make the order without complying with subsection (3)(b)—

(a)the order may be made, and

(b)the order lapses unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made.

(5)The lapse of an order under subsection (4)(b)—

(a)does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and

(b)does not prevent the making of a new order (in new terms).

(6)Undertakings are in the same group for the purposes of sections [F56681AA to 81CA] and this section if they are group undertakings in respect of each other.

(7)Expressions defined in the Companies Act 2006 have the same meaning in [F567sections 81B to 81CA] and this section as in that Act.]

Textual Amendments

F506Ss. 81B-81D inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 100(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(b); S.I. 2014/1847, art. 2

82Temporary public ownershipU.K.

(1)The Treasury may take a parent undertaking of a bank (the “holding company”) into temporary public ownership, in accordance with section 13(2), if the following conditions are met.

(2)Condition 1 is that [F568the PRA is] satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of the bank.

(3)Condition 2 is that the Treasury are satisfied that it is necessary to take action in respect of the holding company for the purpose specified in Condition A or B of section 9.

(4)Condition 3 is that the holding company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(5)Before determining whether Condition 2 is met the Treasury must consult—

[F569(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

(6)Expressions used in this section have the same meaning as in the Companies Act 2006.

Textual Amendments

F569S. 82(5)(a)(aa) substituted for s. 82(5)(a) (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 27(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

Commencement Information

I118S. 82 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

83SupplementalU.K.

(1)In the following provisions references to banks include references to holding companies—

(a)section 10(1),

[F570(aa)section 12ZA(2)(c),]

(b)section 13(3),

(c)section 16(1), and

(d)section 75(5)(a).

(2)Where the Treasury take a bank's holding company into temporary public ownership in reliance on section 82—

(a)section 20(2) applies to (i) directors of the holding company, (ii) directors of the bank, and (iii) directors of a bank in the same group,

(b)section 25(2) applies as if references to a bank were references to a holding company,

(c)sections 27 to 29 apply as if references to a bank were references to a holding company,

(d)a share transfer may be made in respect of securities which were issued by the bank or by another bank which is or was in the same group; and a transfer—

(i)shall be made by onward share transfer order under section 28 or by reverse share transfer order under section 29 (in addition to any that may be made under those sections as applied by paragraph (c) above),

(ii)may be made under section 28 only in respect of securities held by (or for the benefit of) the holding company or a subsidiary undertaking of the holding company,

(iii)is not subject to section 28(4), [F571and]

[F572(iv)is not subject to the restriction in section 29(3) that the securities issued by the bank were transferred under the original order (as defined in section 29(1)).]

(e)section 45 applies as if—

(i)the reference to a bank in subsection (1) were a reference to a holding company, and

(ii)a reference to the bank in subsection (3) were a reference to the holding company, the bank and any other bank which is or was in the same group,

(f)sections 65 to 68 apply, with—

(i)references to the bank or the transferred bank taken as references to the bank, the holding company and any other bank which is or was in the same group, and

(ii)references to securities of the bank taken as including references to securities of the holding company (so that, in particular, sections 65(1)(a)(ii) and 68(1)(a) include references to the earlier transfer of securities issued by the holding company),

(g)other provisions of this Act about share transfer orders apply with any necessary modifications,

(h)section 214B of the Financial Services and Markets Act 2000 applies (contribution to costs of special resolution regimeF573...), and

(i)the reference in section 214B(1)(b) to the bank, and later references in the section, are treated as including references to any other bank which is also a subsidiary undertaking of the holding company (but not to the holding company itself).

(3)A reference in this Act or another enactment to a share transfer order in respect of securities issued by a bank includes (so far as the context permits) a reference to a share transfer order in respect of securities issued by a holding company.

(4)In so far as sections 47 and 60 apply in relation to orders treated as property transfer instruments by virtue of section 45(5)(b) or 46(5)(b) (including those sections as applied by virtue of subsection (2) above) the reference in section 47(1) to the property of a bank includes a reference to the property of a holding company and of any other bank which is or was in the same group.

(5)Expressions used in this section have the same meaning as in the Companies Act 2006.

(6)A reference to two banks being in the same group is a reference to their being group undertakings in respect of each other.

Textual Amendments

F571Word in s. 83(2)(d)(iii) inserted (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 97(10)(a), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F572S. 83(2)(d)(iv) substituted for s. 83(2)(d)(iv)(v) (1.4.2013) by Financial Services Act 2012 (c. 21), ss. 97(10)(b), 122(3) (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F573Words in s. 83(2)(h) omitted (8.4.2010) by virtue of Financial Services Act 2010 (c. 28), s. 26(1)(l), Sch. 2 para. 42

Commencement Information

I119S. 83 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F574Chapter 4U.K.Information, investigation and enforcement

Textual Amendments

Powers to gather informationU.K.

83ZA.InformationU.K.

(1)This section applies only to information and documents reasonably required in connection with the exercise by the Bank of England of functions conferred by or under—

(a)this Part, or

(b)any other enactment giving effect to the resolution and recovery directive.

(2)The Bank of England may, by notice in writing given to a bank or banking group company, require the bank or banking group company—

(a)to provide specified information or information of a specified description, or

(b)to produce specified documents or documents of a specified description.

(3)The information or documents must be provided or produced—

(a)before the end of such reasonable period as may be specified, and

(b)at such place as may be specified.

(4)An officer who has written authorisation from the Bank of England to do so may require a bank or banking group company without delay—

(a)to provide the officer with specified information or information of a specified description, or

(b)to produce to the officer specified documents or documents of a specified description.

(5)The Bank of England may require any information provided under this section to be provided in such form as it may reasonably require.

(6)The Bank of England may require—

(a)any information provided, whether in a document or otherwise, to be verified in such manner, or

(b)any document produced to be authenticated in such manner,

as it may reasonably require.

(7)The powers conferred by subsections (2) and (4) may also be exercised by the Bank to impose requirements on a person who is connected with a bank.

(8)“Officer” means an officer of the Bank of England, and includes a member of the Bank’s staff or an agent of the Bank.

(9)“Specified” means—

(a)in subsections (2) and (3), specified in the notice, and

(b)in subsection (4), specified in the authorisation.

(10)For the purposes of this section, a person is connected with a bank if that person is or has at any relevant time been—

(a)a member of that bank’s group,

(b)a controller of that bank (within the meaning of section 422 of the Financial Services and Markets Act 2000),

(c)any other member of a partnership of which that bank is a member, or

(d)in relation to that bank, a person mentioned in Part 1 of Schedule 15 to the Financial Services and Markets Act 2000 (reading references in that Part to the authorised person as references to the bank).

(11)In subsection (10)(a) “group” has the meaning given by section 3(2)(b).

83ZB.Reports by skilled personsU.K.

(1)This section applies where the Bank of England has required or could require a person to whom subsection (2) applies (“the person concerned”) to provide information or produce documents with respect to any matter (“the matter concerned”) under section 83ZA.

(2)This subsection applies to—

(a)a bank (“B”),

(b)a member of B’s group,

(c)a partnership of which B is a member, or

(d)a person who has at any relevant time been a person falling within paragraph (a), (b) or (c),

who is, or was at the relevant time, carrying on a business.

(3)The Bank of England may either—

(a)by notice in writing given to the person concerned, require that person to provide the Bank with a report on the matter concerned, or

(b)itself appoint a person to provide the Bank with a report on the matter concerned.

(4)When acting under subsection (3)(a), the Bank may require the report to be in such form as may be specified in the notice.

(5)The Bank must give notice of an appointment under subsection (3)(b) to the person concerned.

(6)The person appointed to make a report—

(a)must be a person appearing to the Bank to have the skills necessary to make a report on the matter concerned, and

(b)where the appointment is to be made by the person concerned, must be a person nominated or approved by the Bank.

(7)It is the duty of—

(a)the person concerned, and

(b)any person who is providing (or who has at any time provided) services to the person concerned in relation to the matter concerned,

to give the person appointed to prepare a report all such assistance as the appointed person may reasonably require.

(8)The obligation imposed by subsection (7) is enforceable, on the application of the Bank, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(9)The Bank may, in relation to an appointment under subsection (3)(b), require B to pay to the Bank a fee to cover the expenses incurred by the Bank in relation to the appointment.

(10)In this section “group” has the meaning given by section 3(2)(b).

Appointment of investigatorsU.K.

83ZC.Appointment of persons to carry out general investigationsU.K.

(1)This section applies only for the purposes of the functions of the Bank of England mentioned in section 83ZA(1).

(2)If it appears to the Bank of England that there is good reason for doing so, the Bank may appoint one or more competent persons to conduct an investigation on its behalf into—

(a)the nature, conduct or state of the business of a bank,

(b)a particular aspect of that business, or

(c)the ownership or control of a bank.

(3)If a person appointed under subsection (2) thinks it necessary for the purposes of the investigation, that person may also investigate the business of a person who is or has at any relevant time been—

(a)a member of a group of which the bank under investigation is part, or

(b)a partnership of which the bank is a member.

(4)A person appointed under subsection (2) who decides to investigate the business of any person under subsection (3) must give that person written notice of that decision.

(5)In this section—

  • “business” includes any part of a business, and

  • “group” has the meaning given by section 3(2)(b).

83ZD.Appointment of person to carry out investigations in particular casesU.K.

(1)This section applies if it appears to the Bank of England that there are circumstances suggesting that a person may have failed to comply with any relevant requirement.

(2)The Bank may appoint one or more competent persons to conduct an investigation on its behalf.

(3)In this section “relevant requirement” means—

(a)a requirement imposed by the Bank of England under this Part (other than section [F57583ZR] (regulatory sanctions)), or

(b)a requirement imposed by or under—

(i)any other provision of this Act, or

(ii)any other Act or subordinate legislation,

which [F576, immediately before IP completion day, gave] effect to the recovery and resolution directive.

Textual Amendments

83ZE.Investigations etc in support of foreign resolution authoritiesU.K.

(1)On receiving a request to which subsection (3) applies from a foreign resolution authority, the Bank of England may—

(a)exercise the power conferred by section 83ZA, or

(b)appoint one or more competent persons to investigate any matter.

(2)Accordingly, for the purposes of subsection (1)(a), section 83ZA(1) has effect as if it also referred to information and documents reasonably required by the Bank of England to meet such a request.

(3)This subsection applies to a request if the request is made by a foreign resolution authority in connection with the exercise by that authority of—

F577(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)functions in relation to third-country resolution action (within the meaning of section 89H) corresponding to [F578the stabilisation powers of the Bank of England under this Part].

(4)An investigator appointed under subsection (1)(b) has the same powers as an investigator appointed under section 83ZD.

F579(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)In deciding whether or not to exercise its investigative power, the Bank may take into account in particular—

(a)whether, in the territory of the foreign resolution authority concerned, corresponding assistance would be given to the Bank,

(b)whether the case concerns the breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom,

(c)the seriousness of the case and its importance to persons in the United Kingdom,

(d)whether it is otherwise appropriate in the public interest to give the assistance sought.

(7)The Bank may decide that it will not exercise its investigative power unless the foreign resolution authority undertakes to make such contribution towards the cost of its exercise as the Bank considers appropriate.

F580(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F581(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10)“Foreign resolution authority” means—

F582(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)an authority, in a [F583country or territory outside the United Kingdom], which exercises functions referred to in subsection [F584(3)(b)].

(11)“Investigative power” means one of the powers mentioned in subsection (1).

Textual Amendments

Conduct of investigationsU.K.

83ZF.Investigations: generalU.K.

(1)This section applies if the Bank of England appoints one or more competent persons (“investigators“) under section 83ZC or 83ZD to conduct an investigation on its behalf.

(2)The Bank must give written notice of the appointment of an investigator to the person who is the subject of the investigation (“the person under investigation”).

(3)A notice under subsection (2) must—

(a)specify the provisions under which, and as a result of which, the investigator was appointed, and

(b)state the reason for the investigator’s appointment.

(4)Nothing prevents the Bank from appointing a person who is a member of its staff as an investigator.

(5)An investigator must make a report of the investigation to the Bank.

(6)The Bank may, by a direction to an investigator, control—

(a)the scope of the investigation,

(b)the period during which the investigation is to be conducted,

(c)the conduct of the investigation, and

(d)the reporting of the investigation.

(7)A direction may, in particular—

(a)confine the investigation to particular matters;

(b)extend the investigation to additional matters;

(c)require the investigator to discontinue the investigation or to take only such steps as are specified in the direction;

(d)require the investigator to make such interim reports as are so specified.

(8)If there is a change in the scope or conduct of the investigation and, in the opinion of the Bank, the person under investigation is likely to be significantly prejudiced by not being made aware of it, that person must be given written notice of the change.

(9)If the appointment is under section 83ZD, subsections (2) and (8) do not apply if the Bank believes that the notice required by the subsection in question would be likely to result in the investigation being frustrated.

83ZG.Powers of persons appointed under section 83ZCU.K.

(1)This section applies to an investigator appointed under section 83ZC to conduct an investigation on behalf of the Bank of England.

(2)The investigator may require the person who is the subject of the investigation (“the person under investigation“) or any person connected with the person under investigation—

(a)to attend before the investigator at a specified time and place and answer questions, or

(b)otherwise to provide such information as the investigator may require for the purposes of the investigation.

(3)The investigator may also require any person to produce at a specified time and place any specified documents or documents of a specified description.

(4)A requirement under subsection (2) or (3) may be imposed only so far as the investigator reasonably considers the question, provision of information or production of the document to be relevant to the purposes of the investigation.

(5)For the purposes of this section, a person (“B”) is connected with the person under investigation (“A”) if B is or has at any relevant time been—

(a)a member of A’s group;

(b)a controller of A;

(c)a partnership of which A is a member; or

(d)in relation to A, a person mentioned in Part 1 or 2 of Schedule 15 to the Financial Services and Markets Act 2000 (reading references in those Parts to the authorised person or the person under investigation as references to A).

(6)In this section—

  • “controller” has the same meaning as in the Financial Services and Markets Act 2000 (see section 422),

  • “group” has the meaning given by section 3(2)(b), and

  • “specified” means specified in a notice in writing.

83ZH.Powers of persons appointed as a result of section 83ZDU.K.

(1)This section applies to an investigator appointed under section 83ZD to conduct an investigation on behalf of the Bank of England.

(2)The investigator has—

(a)the powers conferred by section 83ZG on an investigator appointed under section 83ZC, and

(b)the powers conferred by subsections (3) and (4).

(3)The investigator may require the person who is the subject of the investigation (“the person under investigation“) to give the investigator all assistance in connection with the investigation which that person is reasonably able to give.

(4)The investigator may require a person who is neither the person under investigation nor a person connected with the person under investigation—

(a)to attend before the investigator at a specified time and place and answer questions, or

(b)otherwise to provide such information as the investigator may require for the purposes of the investigation.

(5)A requirement may only be imposed under subsection (4) if the investigator is satisfied that the requirement is necessary or expedient for the purposes of the investigation.

(6)Section 83ZG(5) and (6) applies for the purposes of this section.

83ZI.Admissibility of statements made to investigatorsU.K.

(1)A statement made to an investigator appointed under section 83ZC or 83ZD by a person in compliance with an information requirement is admissible in evidence in any proceedings, so long as it also complies with any requirements governing the admissibility of evidence in the circumstances in question.

(2)But in criminal proceedings in which that person is charged with an offence to which this subsection applies—

(a)no evidence relating to the statement may be adduced, and

(b)no question relating to it may be asked,

by or on behalf of the prosecution, the PRA or the FCA (as the case may be), unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

(3)Subsection (2) applies to any offence other than one under—

(a)section 83ZN(4),

(b)section 398 of the Financial Services and Markets Act 2000 (misleading FCA or PRA: residual cases),

(c)section 5 of the Perjury Act 1911 (false statements made otherwise than on oath),

(d)section 44(2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made otherwise than on oath), or

(e)Article 10 of the Perjury (Northern Ireland) Order 1979.

(4)“Information requirement” means a requirement imposed by an investigator under section 83ZG, 83ZH or 83ZJ.

Information and documents: supplemental provisionU.K.

83ZJ.Information and documents: supplemental provisionU.K.

(1)If the Bank of England has power under this Part to require a person to produce a document but it appears that the document is in the possession of a third person, that power may be exercised in relation to the third person.

(2)If a document is produced in response to a requirement imposed under this Part, the person to whom it is produced may—

(a)take copies or extracts from the document, or

(b)require the person producing the document, or any relevant person, to provide an explanation of the document.

(3)A document so produced may be retained for so long as the person to whom it is produced considers that it is necessary to retain it (rather than copies of it) for the purposes for which the document was requested.

(4)If the person to whom a document is so produced has reasonable grounds for believing—

(a)that the document may have to be produced for the purposes of any legal proceedings, and

(b)that it might otherwise be unavailable for those purposes,

it may be retained until the proceedings are concluded.

(5)If a person who is required under this Part to produce a document fails to do so, the Bank or an investigator may require that person to state, to the best of that person’s knowledge and belief, where the document is.

(6)A lawyer may be required under this Part to furnish the name and address of the lawyer’s client.

(7)No person may be required under this Part to disclose information or produce a document in respect of which the person (“A”) owes an obligation of confidence by virtue of carrying on the business of banking unless—

(a)A is the person under investigation or a member of that person’s group,

(b)the person to whom the obligation of confidence is owed is the person under investigation or a member of that person’s group,

(c)the person to whom the obligation of confidence is owed consents to the disclosure or production, or

(d)the imposing on A of a requirement with respect to such information or document has been specifically authorised by the Bank.

(8)If a person claims a lien on a document, its production under this Part does not affect the lien.

(9)In this section—

  • “controller” has the same meaning as in the Financial Services and Markets Act 2000 (see section 422),

  • “group” has the meaning given by section 3(2)(b),

  • “investigator” means a person appointed under section 83ZC or 83ZD,

  • “relevant person”, in relation to a person who is required to produce a document, means a person who—

    (a)

    has been or is or is proposed to be a director or controller of that person,

    (b)

    has been or is an auditor of that person,

    (c)

    has been or is an actuary, accountant or lawyer appointed or instructed by that person, or

    (d)

    has been or is an employee of that person.

83ZK.Protected itemsU.K.

(1)A person may not be required under this Part to produce, disclose or permit the inspection of protected items.

(2)“Protected items” means—

(a)communications between a professional legal adviser and that adviser’s client or any person representing such a client which fall within subsection (3),

(b)communications between a professional legal adviser, that adviser’s client or any person representing such a client and any other person which fall within subsection (3) (as a result of paragraph (b) of that subsection), and

(c)items which—

(i)are enclosed with, or referred to in, such communications,

(ii)fall within subsection (3), and

(iii)are in the possession of a person entitled to possession of them.

(3)A communication or item falls within this subsection if it is made—

(a)in connection with the giving of legal advice to the client, or

(b)in connection with, or in contemplation of, legal proceedings and for the purposes of those proceedings.

(4)A communication or item is not a protected item if it is held with the intention of furthering a criminal purpose.

83ZL.Entry of premises under warrantU.K.

(1)A justice of the peace may issue a warrant under this section if satisfied on information on oath given by or on behalf of the Secretary of State, the Bank of England or an investigator that there are reasonable grounds for believing that the first, second or third set of conditions is satisfied.

(2)The first set of conditions is—

(a)that a person on whom an information requirement has been imposed has failed (wholly or in part) to comply with it, and

(b)that on the premises specified in the warrant—

(i)there are documents which have been required, or

(ii)there is information which has been required.

(3)The second set of conditions is—

(a)that the premises specified in the warrant are premises of a bank or a member of the same group (within the meaning of section 3(2)(b)) as a bank,

(b)that there are on the premises documents or information in relation to which an information requirement could be imposed, and

(c)that if such a requirement were to be imposed—

(i)it would not be complied with, or

(ii)the documents or information to which it related would be removed, tampered with or destroyed.

(4)The third set of conditions is—

(a)that an offence mentioned in section 83ZN(4) or (5) has been (or is being) committed by any person,

(b)that there are on the premises specified in the warrant documents or information relevant to whether that offence has been (or is being) committed,

(c)that an information requirement could be imposed in relation to those documents or that information, and

(d)that if such a requirement were to be imposed—

(i)it would not be complied with, or

(ii)the documents or information to which it related would be removed, tampered with or destroyed.

(5)A warrant under this section authorises a constable—

(a)to enter the premises specified in the warrant,

(b)to search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which a warrant under this section was issued (“the relevant kind”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them,

(c)to take copies of, or extracts from, any documents or information appearing to be of the relevant kind,

(d)to require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found, and

(e)to use such force as may be reasonably necessary.

(6)A warrant under this section may be executed by any constable.

(7)The warrant may authorise persons to accompany any constable who is executing it.

(8)The powers in subsection (5) may be exercised by a person authorised by the warrant to accompany a constable; but that person may exercise those powers only in the company of, and under the supervision of, a constable.

(9)In England and Wales, sections 15(5) to (8) and 16(3) to (12) of the Police and Criminal Evidence Act 1984 (execution of search warrants and safeguards) apply to warrants issued under this section.

(10)In Northern Ireland, Articles 17(5) to (8) and 18(3) to (12) of the Police and Criminal Evidence (Northern Ireland) Order 1989 apply to warrants issued under this section.

(11)In the application of this section to Scotland—

(a)for the reference to a justice of the peace substitute references to a justice of the peace or a sheriff; and

(b)for the references to information on oath substitute references to evidence on oath.

(12)“Investigator” means an investigator appointed under section 83ZC or 83ZD.

(13)“Information requirement” means a requirement imposed—

(a)by the Bank of England under section 83ZA or 83ZJ, or

(b)by an investigator under section 83ZG, 83ZH or 83ZJ.

83ZM.Retention of documents obtained under section 83ZLU.K.

(1)Any document of which possession is taken under section 83ZL (“a seized document”) may be retained so long as it is necessary to retain it (rather than copies of it) in the circumstances.

(2)A person claiming to be the owner of a seized document may apply to a magistrates’ court or (in Scotland) the sheriff for an order for the delivery of the document to the person appearing to the court or sheriff to be the owner.

(3)If on an application under subsection (2) the court or (in Scotland) the sheriff cannot ascertain who is the owner of the seized document the court or sheriff (as the case may be) may make such order as the court or sheriff thinks fit.

(4)An order under subsection (2) or (3) does not affect the right of any person to take legal proceedings against any person in possession of a seized document for the recovery of the document.

(5)Any right to bring proceedings (as described in subsection (4)) may only be exercised within 6 months of the date of the order made under subsection (2) or (3).

83ZN.Offences etcU.K.

(1)If a person other than the investigator (“the defaulter”) fails to comply with a requirement imposed on the defaulter under section 83ZG, 83ZH or 83ZJ, the person imposing the requirement may certify that fact in writing to the court.

(2)If the court is satisfied that the defaulter has failed without reasonable excuse to comply with the requirement, it may deal with the defaulter (and, in the case of a body corporate, any director or other officer) as if that person were in contempt.

(3)“Officer”, in relation to a limited liability partnership, means a member of the limited liability partnership.

(4)A person who knows or suspects that an investigation is being or is likely to be conducted under section 83ZC, 83ZD or 83ZE is guilty of an offence if—

(a)that person falsifies, conceals, destroys or otherwise disposes of a document which that person knows or suspects is or would be relevant to such an investigation, or

(b)that person causes or permits the falsification, concealment, destruction or disposal of such a document,

unless that person shows that that person had no intention of concealing facts disclosed by the document from the investigator.

(5)A person who, in purported compliance with a requirement imposed on that person by any relevant requirement—

(a)provides information which that person knows to be false or misleading in a material particular, or

(b)recklessly provides information which is false or misleading in a material particular,

is guilty of an offence.

(6)Any person who intentionally obstructs the exercise of any rights conferred by a warrant under section 83ZL is guilty of an offence.

(7)Subsection (8) applies if section 85(2) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 is in force on the relevant day.

(8)A person guilty of an offence under subsection (4), (5) or (6) is liable, on summary conviction—

(a)in England and Wales, to imprisonment for a term not exceeding 3 months or a fine, or both;

(b)in Scotland or Northern Ireland, to imprisonment for a term not exceeding 3 months or a fine not exceeding level 5 on the standard scale, or both.

(9)Subsection (10) applies if section 85(2) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 is not in force on the relevant day.

(10)A person guilty of an offence under subsection (4), (5) or (6) is liable, on summary conviction to imprisonment for a term not exceeding 3 months or a fine not exceeding level 5 on the standard scale, or both.

(11)In this section—

  • “court” means—

    (a)

    the High Court;

    (b)

    in Scotland, the Court of Session;

  • “relevant day” means the day on which the Bank Recovery and Resolution Order 2014 (which inserted this section into this Act) was made;

  • “relevant requirement” has the meaning given in section 83ZD.

83ZO.Prosecution of offences under section 83ZNU.K.

(1)Proceedings for an offence under section 83ZN may be instituted—

(a)in England and Wales, only by the Bank of England or by or with the consent of the Director of Public Prosecutions, and

(b)in Northern Ireland, only by the Bank of England or by or with the consent of the Director of Public Prosecutions for Northern Ireland.

(2)In exercising its power to institute proceedings for an offence under section 83ZN, the Bank must comply with any conditions or restrictions imposed in writing by the Treasury.

(3)Conditions or restrictions may be imposed under subsection (2) in relation to proceedings generally, or such proceedings or categories of proceedings as the Treasury may direct.

83ZP.Offences under section 83ZN by bodies corporate etcU.K.

(1)If an offence under section 83ZN committed by a body corporate is shown—

(a)to have been committed with the consent or connivance of an officer, or

(b)to be attributable to any neglect on the part of an officer,

the officer as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.

(2)If the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with that member’s functions of management as if that member were a director of the body.

(3)If an offence under section 83ZN committed by a partnership is shown—

(a)to have been committed with the consent or connivance of a partner, or

(b)to be attributable to any neglect on the part of a partner,

the partner as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.

(4)In subsection (3) “partner” includes a person purporting to act as partner.

(5)“Officer” in relation to a body corporate means—

(a)a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity, and

(b)an individual who is a controller of the body (and for these purposes, “controller” has the meaning given in section 422 of the Financial Services and Markets Act 2000).

(6)If an offence under section 83ZN committed by an unincorporated association (other than a partnership) is shown—

(a)to have been committed with the consent or connivance of an officer of the association or a member of its governing body, or

(b)to be attributable to any neglect on the part of such an officer or member,

that officer or member as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.

Enforcement of relevant requirementsU.K.

83ZQ.Injunctions: prevent failure to comply with relevant requirementU.K.

(1)If, on the application of the Bank of England, the court is satisfied that there is a reasonable likelihood that any person will contravene a relevant requirement, the court may make an order restraining (or in Scotland an interdict prohibiting) the contravention.

(2)The jurisdiction conferred by this section is exercisable—

(a)in England and Wales and Northern Ireland, by the High Court, and

(b)in Scotland, by the Court of Session.

(3)In this section “relevant requirement” has the meaning given in section 83ZD.

83ZR.Regulatory sanctionsU.K.

(1)If the Bank of England considers that a person has failed to comply with a relevant requirement imposed on the person, it may do one or more of the following—

(a)publish a statement to that effect;

(b)impose on that person a penalty, in respect of the failure, of such amount as it considers appropriate;

(c)with a view to ensuring that the failure ceases or is not repeated or the consequences of the failure are mitigated, direct that person to refrain from any conduct;

(d)prohibit that person from holding an office or position involving responsibility for taking decisions about the management of—

(i)a named bank,

(ii)a bank of a specified description, or

(iii)any bank.

(2)A prohibition under subsection (1)(d) may apply—

(a)for a specified period,

(b)until further notice, or

(c)permanently.

(3)If the Bank of England considers that a failure by a person to comply with a relevant requirement occurred with the consent or connivance of, or was attributable to any neglect on the part of, an officer of that person, it may do one or more of the following—

(a)publish a statement to that effect;

(b)impose on that officer a penalty, in respect of the failure, of such amount as it considers appropriate;

(c)with a view to ensuring that the failure ceases or is not repeated or the consequences of the failure are mitigated, direct that person to refrain from any conduct specified in the order.

(4)A penalty under this section—

(a)must be paid to the Bank of England, and

(b)may be enforced by the Bank as a debt.

(5)In this section “relevant requirement” has the meaning given in section 83ZD.

83ZS.Determination of sanctionsU.K.

When determining the type of sanction, and level of any penalty, to be imposed on a person under section 83ZR, the Bank of England must take into account all relevant circumstances, including where appropriate—

(a)the gravity and the duration of the failure,

(b)the degree of responsibility of the person,

(c)the financial strength of the person,

(d)the amount of profits gained or losses avoided by the person,

(e)the losses for third parties caused by the failure,

(f)the level of co-operation of the person with the Bank,

(g)previous failures by the person, and

(h)any potential systemic consequences of the failure.

83ZT.Procedure: warning noticeU.K.

(1)If the Bank of England proposes to impose a sanction on a person under section 83ZR(1) or (3) it must give that person a warning notice.

(2)Section 387 of the Financial Services and Markets Act 2000 applies in relation to a warning notice given under subsection (1) and to the Bank as it applies in relation to a warning notice given under that Act and to the regulator which gave that notice, subject to subsections (3) and (4).

(3)In complying with section 387(1)(a) of that Act, a warning notice must in particular—

(a)if it is about a proposal to publish a statement, set out the terms of the statement,

(b)if it is about a proposal to impose a penalty, specify the amount of the penalty,

(c)if it is about a proposal to direct a person to refrain from certain conduct, specify the conduct, and

(d)if it is about a proposal to impose a prohibition on holding an office or other position, specify the extent of the prohibition.

(4)For the purposes of subsection (2), section 387 of that Act has effect as if subsections (1A) and (3A) were omitted.

83ZU.Procedure: decision noticeU.K.

(1)If the Bank of England decides to impose a sanction on a person under section 83ZR(1) or (3) it must without delay give that person a decision notice.

(2)If the decision is to publish a statement, the decision notice must set out the terms of the statement.

(3)If the decision is to impose a penalty, the decision notice must specify the amount of the penalty.

(4)If the decision is to refrain from certain conduct, the decision notice must specify the conduct.

(5)If the decision is to impose a prohibition on holding an office or other position, the decision notice must specify the extent of the prohibition.

(6)Section 388 of the Financial Services and Markets Act 2000 applies in relation to a decision notice given under subsection (1) and the Bank as it applies in relation to a decision notice given under that Act and the regulator which gave that notice, subject to subsection (7).

(7)Section 388 of that Act has effect for the purposes of subsection (6) as if—

(a)in subsection (1)(e)(i) for “this Act” there were substituted “section 83ZW of the Banking Act 2009”, and

(b)subsections (1A) and (2) were omitted.

83ZV.Procedure: generalU.K.

(1)Sections 389, 390 and 392 to 394 of the Financial Services and Markets Act 2000 apply in relation to a warning notice given under section 83ZT, a decision notice given under section 83ZU and the Bank as they apply in relation to a warning notice or decision notice given under that Act and the regulator which gave that notice, subject to subsections (2) to (4).

(2)Section 389 of that Act has effect as if subsection (2) were omitted,

(3)Section 390 of that Act has effect as if—

(a)in subsection (2A), in paragraph (a), for “133(6)(b)” there were substituted “133(5)(b)”,

(b)in that paragraph, for “133(6)” there were substituted “133(5)”,

(c)for subsection (4) there were substituted—

“(4)A final notice about a direction under section 83ZR(1)(c) or (3)(c) of the Banking Act 2009 or a prohibition under section 83ZR(1)(d) of that Act must—

(a)specify the conduct to which the direction relates or the extent of the prohibition, and

(b)give details of the date on which the direction or prohibition has effect.”.

(4)Section 392 has effect as if for paragraphs (a) and (b) there were substituted—

“(a)warning notice given under section 83ZT(1) of the Banking Act 2009;

(b)a decision notice given under section 83ZU(1) of the Banking Act 2009.”.

83ZW.AppealU.K.

(1)If the Bank of England decides to impose a sanction on a person under section 83ZR, the person may appeal to the Upper Tribunal.

[F585(2)]The Bank of England may not impose a sanction while an appeal under this section could be brought or is pending.

Textual Amendments

F585S. 83ZW(2): s. 83Z(3) renumbered as s. 83ZW(2) (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 19

83ZX.Injunctions: failure to comply with certain section 83ZR sanctionsU.K.

(1)If, on the application of the Bank of England, the court is satisfied—

(a)that there is a reasonable likelihood that there will be a compliance failure, or

(b)that there has been a compliance failure and there is a reasonable likelihood that it will continue or be repeated,

the court may make an order restraining the conduct constituting the failure.

(2)If, on the application of the Bank, the court is satisfied—

(a)that there has been a compliance failure, and

(b)that there are steps which could be taken for remedying the failure,

the court may make an order requiring anyone who appears to have been knowingly concerned in the failure to take such steps as the court may direct to remedy it.

(3)If, on the application of the Bank of England, the court is satisfied—

(a)that there may have been a compliance failure by any person, or

(b)that a person may have been knowingly concerned in a compliance failure,

the court may make an order restraining that person from dealing with any assets which it is satisfied the person is reasonably likely to deal with.

(4)“Compliance failure” means—

(a)a failure to comply with a direction under section 83ZR(1)(c) or (3)(c), or

(b)a breach of a prohibition imposed under section 83ZR(1)(d).

(5)The jurisdiction conferred by this section is exercisable—

(a)in England and Wales and Northern Ireland, by the High Court, and

(b)in Scotland, by the Court of Session.

(6)In this section—

(a)references to an order restraining anything are, in Scotland, to be read as references to an interdict prohibiting that thing,

(b)references to remedying a failure include mitigating its effect, and

(c)references to dealing with assets include disposing of them.

83ZY.PublicationU.K.

(1)In the case of a warning notice under section 83ZT(1)—

(a)neither the Bank of England nor a person to whom it is given or copied may publish the notice,

(b)a person to whom the notice is given or copied may not publish any details concerning the notice unless the Bank has published those details, and

(c)after consulting the persons to whom the notice is given or copied, the Bank may publish such information about the matter to which the notice relates as it considers appropriate.

(2)A person to whom a decision notice under section 83ZU(1) is given or copied may not publish the notice or any details concerning it unless the Bank has published the notice or those details.

(3)A notice of discontinuance must state that, if the person to whom the notice is given consents, the Bank may publish such information as it considers appropriate about the matter to which the discontinued proceedings related.

(4)A copy of a notice of discontinuance must be accompanied by a statement that, if the person to whom the notice is copied consents, the Bank may publish such information as it considers appropriate about the matter to which the discontinued proceedings related, so far as relevant to that person.

(5)Subject to subsection (8), where the Bank gives a decision notice it may publish such information about the matter to which the notice relates as it considers appropriate.

(6)Where the Bank publishes information under subsection (5) and the person to whom the decision notice is given refers the matter to the Upper Tribunal, the Bank must, without undue delay, publish on its official website information about the status of the appeal and its outcome.

(7)Subject to subsection (8), where the Bank gives a final notice—

(a)it must, without undue delay, publish details of any sanction to which the notice relates on its internet website, and

(b)it may publish such other information about the matter to which the notice relates as it considers appropriate.

(8)Information about a matter to which a decision notice or a final notice relates must be published anonymously where—

(a)the sanction is imposed (or proposed to be imposed) on an individual and following an obligatory prior assessment publication of personal data is found to be disproportionate, or

(b)were it not published anonymously, publication would—

(i)jeopardise the stability of financial markets or an ongoing criminal investigation, or

(ii)cause, insofar as it can be determined, disproportionate damage to the persons involved.

(9)Where subsection (8) applies, the person publishing the information may make such arrangements as to the publication of information (including as to the timing of publication) as are necessary to preserve the anonymity of the person on whom the sanction is imposed.

(10)Where the Bank publishes information in accordance with subsections (6) to (9), it must—

(a)ensure the information remains on its official website for at least five years, unless the information is personal data and [F586the data protection legislation] requires the information to be retained for a different period, F587...

F587(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11)In this section—

  • [F588“the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);]

  • “notice of discontinuance” and “final notice” have the same meaning as in sections 389 and 390 of the Financial Services and Markets Act 2000 (which are applied (with modifications) by section 83ZV).

Textual Amendments

83ZZ.Co-operationU.K.

In connection with the exercise of its powers to impose sanctions under section 83ZR, the Bank of England must take such steps as it considers appropriate to co-operate with—

(a)the FCA [F589, and]

F590(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)any person who exercises functions outside the United Kingdom equivalent to those exercisable by the Bank under this Part or any other enactment [F591which, immediately before IP completion day, gave] effect to the recovery and resolution directive.

Textual Amendments

83Z1.Delegation of enforcement functionsU.K.

(1)The Bank of England may, by agreement made with the [F592FCA], delegate to [F593the FCA] its enforcement functions, subject to such restrictions and conditions, and for such period, as may be specified in the agreement.

(2)For the purposes of this section—

(a)“enforcement functions” of the Bank of England are its functions under, or by virtue of—

(i)section 83ZD;

(ii)section 83ZF;

(iii)section 83ZJ;

(iv)section 83ZL;

(v)section 83ZO;

(vi)sections 83ZQ to 83ZZ;

F594(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)The Bank of England must make provision for the reimbursement of any expenses incurred by the [F595FCA] in the performance, in accordance with the terms of any agreement, of any functions delegated under this section.

Textual Amendments

Enforcement of share transfer ordersU.K.

83Z2.Enforcement: share transfer ordersU.K.

(1)The Treasury may by regulations make provision for the enforcement of obligations imposed by or under a share transfer order.

(2)Regulations—

(a)may confer jurisdiction on a court or tribunal,

(b)may not impose a penalty or create a criminal offence,

(c)may make provision which has effect in respect of an order only if applied by the order.

(3)Regulations are to be made by statutory instrument and are subject to annulment in pursuance of a resolution of either House of Parliament.]

[F596Chapter 5U.K. Special cases]

Textual Amendments

F596Pt. 1 Ch. 5 formed from ss. 83A-89G (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 98

[F597Banks not regulated by PRAU.K.

Textual Amendments

F597 S. 83A and cross-heading inserted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 17 para. 28 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

83AModifications of PartU.K.

(1)In the application of this Part to an FCA-regulated bank the modifications specified in the Table apply.

(2)In this section—

  • “ FCA-regulated bank ” means a bank which does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000;

  • “ immediate group ” has the meaning given by section 421ZA of the Financial Services and Markets Act 2000;

  • “ PRA-authorised person ” has the meaning given by section 2B(5) of that Act.

TABLE OF MODIFICATIONS
ProvisionModification
[F598Section 3 Treat the definition of “normal insolvency proceedings” in subsection (1) as including investment bank special administration established by the Investment Bank Special Administration Regulations 2011 (S.I. 2011/245).]
[F599Section 6A Treat the reference to the PRA in subsections (3)(a) and (7) as references to the FCA.
Section 6C Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. ]
Section 7

(a) Treat the references to the PRA in subsections [F600(1), (5A), (5C), (5D) and (5F)] as references to the FCA.

(b) F601. . .

(c) If the bank has as a member of its immediate group a PRA-authorised person the FCA must consult the PRA before determining whether or not Condition 2 is met.

[F602(d) Subsections (5G)(a) and (5H)(a) do not apply unless the bank has as a member of its immediate group a PRA-authorised person.]

[F603Section 7A In subsection (1), the reference to the PRA does not apply unless the bank has as a member of its immediate group a PRA-authorised person ]
F604. . .F604. . .
F604. . .F604. . .
[F605Section 8ZA

(a) Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.

F606. . .]

Section 9Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
F607. . .F607. . .
Section 24Ignore subsection (1)(c).
Section 25Ignore subsection (2)(c).
Section 26Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
[F608Section 26ZA Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.]
Section 26ASubsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 27Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 28Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 29Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 30Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 31Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 41Ignore subsection (1)(c).
[F609Section 41A Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. ]
Section 42Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 42ASubsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 43Subsection (7)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 44Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
[F609Section 44A Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. ]
[F610Section 44D Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 44ESubsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.]
Section 45Subsection (8)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 46Subsection (7)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
[F609Section 48H Subsection (5)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 48U Subsection (4)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 48V Subsection (6)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.
Section 48W Subsection (9)(a) does not apply unless the bank has as a member of its immediate group a PRA-authorised person.]
[F611Section 63 Treat the reference to insolvency in subsection (1A), as including investment bank special administration, established by the Investment Bank Special Administration Regulations 2011
Section 66 Treat the reference to insolvency in subsection (1ZA), as including investment bank special administration, established by the Investment Bank Special Administration Regulations 2011
Section 81AA Treat the references to the PRA in subsections (3)(b) and (5)(a) as references to the FCA. ]
Section 81B

[F612(a) Treat the references to the PRA in subsections (2) and (2A) as references to the FCA.

(b) Ignore subsection (6)(b) unless the bank has as a member of its immediate group a PRA-authorised person.]

[F613Section 81ZZBA Treat the reference to the PRA in subsection (4) as a reference to the FCA.
Section 81ZZBB

(a) Treat the references to the PRA in subsections (2) and (6) as references to the FCA.

(b) Subsections (7)(b) and (8)(b) do not apply unless the banking group company has as a member of its immediate group a PRA-authorised person.]

[F614Section 81ZBA

(a) Treat the references to the PRA in subsections (2)(a) and (2A) as references to the FCA.

(b) Ignore subsection (8)(a) unless the bank has as a member of its immediate group a PRA-authorised person.

F615. . .]

[F613Section 81ZBB Treat the reference to the PRA in subsection (4) as a reference to the FCA.
Section 81ZBC

(a) Treat the references to the PRA in subsections (2) and (6) as references to the FCA.

(b) Subsections (7)(b) and (8)(b) do not apply unless the banking group company has as a member of its immediate group a PRA-authorised person.]

[F609Section 81BA

[F616(a) Treat the references to the PRA in subsections (2)(a) and (2A) as references to the FCA.

(b)] Subsection (5)(b) does not apply unless the bank has as a member of its immediate group a PRA-authorised person. ]

[F613Section 81BB Treat the reference to the PRA in subsection (4) as a reference to the FCA.
Section 81BC

(a) Treat the references to the PRA in subsections (2) and (6) as references to the FCA.

(b) Subsections (7)(b) and (8)(b) do not apply unless the banking group company has as a member of its immediate group a PRA-authorised person.]

Section 82

(a) Treat the reference to the PRA in subsection (2) as a reference to the FCA.

(b) Ignore subsection (5)(a).

F617. . .F617. . .]

Textual Amendments

F600Words in s. 83A(2) table substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 99(3)(a)

F601Words in s. 83A(2) table omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 99(3)(b)

F604Words in s. 83A(2) table omitted (1.1.2015) by virtue of The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 99(5)

F612Words in s. 83A(2) table substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 99(8)

Building societies, &c.U.K.

84Application of Part 1: generalU.K.

[F618This Part applies to building societies (within the meaning of section 119 of the Building Societies Act 1986) as it applies to banks, subject to—

(a)the provisions of the Table, and

(b)sections [F61984ZA] to 84D (which relate to the [F620second and fourth stabilisation options] ).]

SectionTopicModification or note
F621. . .F621. . .F621. . .
13Temporary public ownershipThe procedure provided by section 85 has effect in place of share transfer orders.
14 to 32Transfer of securities

The procedure provided by section 85 has effect in place of share transfer orders; and—

(a)

sections 28 and 30 do not apply, and

(b)

section 27 applies following an order under section 85 as following a share transfer order.

33Property transfer instrument: nature

A property transfer instrument in respect of a building society may—

(a)

cancel shares in the building society;

(b)

confer rights and impose liabilities in place of cancelled shares (whether by way of actual or deemed shares in a transferee building society or by way of other rights and liabilities in relation to a transferee bank).

33 and 36Property transfer instrument: continuityA property transfer instrument in respect of a bank which provides for transfer to a building society may confer rights and impose liabilities by way of actual or deemed shares in the building society.
34Property transfer instrument: effectA property transfer instrument may, in particular, have effect without causing sections 93 to 102D of the Building Societies Act 1986 (mergers and transfers) to apply.
42Supplemental property transfer instrument

A supplemental property transfer instrument in respect of a building society may—

(a)

cancel shares in the building society;

(b)

confer rights and impose liabilities in place of cancelled shares (whether by way of actual or deemed shares in a transferee building society or by way of other rights and liabilities in relation to a transferee bank).

45Temporary public ownership: property transfer

(a)Section 45 applies following an order under section 85 as following a share transfer order.

(b)A property transfer order in respect of a building society may cancel shares in the building society.

49 to 62Compensation

(a)A reference to a share transfer order includes a reference to an order under section 85.

(b)A resolution fund order may not be made under section 51(2)(b).

(c)If and in so far as an order under section 85 provides for the issue of new deferred shares, section 51(2) shall not apply [F622but the Treasury may make a third party compensation order].

63 to 75Incidental functionsA reference to a share transfer order includes a reference to an order under section 85.

Textual Amendments

F622Words in s. 84 inserted (8.4.2010) by Financial Services Act 2010 (c. 28), ss. 21(5), 26(1)(f)

Commencement Information

I120S. 84 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F62384ZABridge bank: share transfer instrumentsU.K.

(1)This section applies for the purpose of the exercise of the second stabilisation option (transfer to a bridge bank) in relation to a building society.

(2)A share transfer instrument made under section 12(2)(a) may—

(a)convert the building society into a company (“the successor company”), and

(b)make other provision for the purposes of, or in connection with the conversion of the building society.

(3)The provision which may be made under subsection (2)(b) includes—

(a)provision cancelling shares in the building society;

(b)provision cancelling membership rights in the building society;

(c)provision converting shares in the building society into deposits with the successor company;

(d)provision conferring rights and imposing liabilities in place of cancelled shares and membership rights;

(e)provision requiring the FCA to cancel the building society's registration under the Building Societies Act 1986 at a time specified in or determined in accordance with the instrument;

(f)provision that any person approved for the purposes of Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) in relation to the building society immediately before the share transfer instrument is made continues to be approved for those purposes in relation to the successor company (but without affecting the power of the FCA or the PRA to vary or withdraw an approval);

(g)provision for the successor company on its incorporation to be wholly owned by a bridge bank specified in the instrument (the “parent undertaking”);

(h)where provision is made under paragraph (g), provision—

(i)for the transfer of liabilities from the successor company to the parent undertaking, and for the creation of corresponding liabilities of the successor company to the parent undertaking;

(ii)replacing a liability (of any form) of the building society or the successor company with a liability or security (of any form or class) of the parent undertaking.

(4)Section 15 (share transfer instruments) is to be read as if the provision referred to in subsection (1) of that section included the provision referred to in subsections (2) and (3) of this section.]

Textual Amendments

[F62484A.Bail-in option: building societiesU.K.

(1)This section applies for the purpose of the exercise of the fourth stabilisation option (bail-in) in relation to a building society.

(2)Subsection (2A) of section 12A (bail-in option) is to be read as if the provision referred to included provision under this section.

(3)Subsection (1) of section 12AA (bail-in: sequence of write-down and conversion of capital instruments and liabilities) is to be read as if the powers referred to included the powers conferred by this section, sections 84B and 84C and the provisions modified by section 84D.

(4)A resolution instrument with respect to a building society may make—

(a)provision of the kind mentioned in subsection (5);

(b)other provision for the purposes of, or in connection with, provision of the kind mentioned in subsection (5) made by that or another instrument.

(5)A resolution instrument may—

(a)convert the building society into a company, or

(b)transfer all the property, rights and liabilities of the building society to a company.

(6)In the following provisions of this section, “the successor company”, in relation to a building society, means the company into which the building society is converted, or to which the property, rights and liabilities of the building society are transferred, as a result of provision made under subsection (5).

(7)The provision that may be made under subsection (4)(b) includes—

(a)provision cancelling shares in the building society;

(b)provision cancelling membership rights in the building society;

(c)provision converting shares in the building society into deposits with the successor company;

(d)provision conferring rights and imposing liabilities in place of cancelled shares and membership rights;

(e)provision requiring the FCA to cancel the building society’s registration under the Building Societies Act 1986 at a time specified in or determined in accordance with the instrument;

(f)provision that any person approved for the purposes of Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) in relation to the building society immediately before the resolution instrument is made continues to be approved for those purposes in relation to the successor company (but without affecting the powers of the FCA or PRA to vary or withdraw an approval);

(g)provision which could be included in a property transfer instrument by virtue of—

(i)section 34(7) and (8) (property held on trust), or

(ii)section 36(1) to (5) (continuity).

(8)The provision that may be made under subsection (4)(b) also includes—

(a)in a case where the resolution instrument makes provision under subsection (5)(a), provision for the successor company on its incorporation to be wholly owned by a company specified in the instrument;

(b)in a case where the resolution instrument makes provision under subsection (5)(b) transferring the property, rights and liabilities of the building society to a company which is wholly owned by another company, provision relating to that other company;

(c)in either case, provision—

(i)for the transfer of liabilities from the successor company to the other company mentioned in paragraph (a) or (b) (“the parent undertaking”), and for the creation of corresponding liabilities of the successor company to the parent undertaking;

(ii)replacing a liability (of any form) of the building society or the successor company with a liability or security (of any form or class) of the parent undertaking.

(9)A company may not be specified under subsection (8)(a) unless it is (or is to be) wholly owned by—

(a)the Bank of England,

(b)a resolution administrator appointed under section 62B(1), or

(c)a person nominated by the Bank of England.

(10)Where a resolution instrument makes provision under subsection (5), section 37 (licences) applies as if the references to a property transfer instrument were references to the resolution instrument.

(11)A resolution instrument may provide for different provision made under this section by the instrument to take effect at different times.

(12)In this section—

  • “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

  • “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), but ignoring the exclusions in article 6.

Textual Amendments

84B.Further provision: conversion of building society into companyU.K.

(1)This section applies where

[F625(a)a share transfer instrument makes provision under section 84ZA(2)(a), or

(b)] a resolution instrument makes provision under section 84A(5)(a)

(2)The [F626share transfer instrument or] resolution instrument must—

(a)state the company’s proposed name;

(b)set out the terms of the memorandum of association of the company;

(c)set out the terms of the articles of association of the company (to the extent that these are not to be supplied by the default application of model articles: see section 20 of the Companies Act 2006);

(d)contain the statements and information required to be included in or to accompany an application for a certificate under section 761 of the Companies Act 2006 (public company: requirement as to minimum share capital).

(3)The conversion into the successor company takes effect on the registration of the company under the Companies Act 2006.

(4)The successor company is to be treated as the same person in law as the building society.

(5)The documents required by section 9 of the Companies Act 2006 (registration documents) to be delivered to the registrar (within the meaning of that Act) include a copy of the [F627share transfer instrument or] resolution instrument.

(6)In section 13 of the Companies Act 2006 (statement of compliance) and section 14 of that Act (registration), the reference to the requirements of that Act is to be read as a reference to the requirements of that Act as modified by this section.

(7)If the [F628share transfer instrument or] resolution instrument complies with subsection (2)(d), an application for a trading certificate is to be taken to have been made in accordance with section 762 of the Companies Act 2006 (procedure for obtaining trading certificate).

(8)In this section—

  • “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

  • “the successor company”, in relation to a building society, means the company into which the building society is converted as a result of provision made under section [F62984ZA(2)(a) or] 84A(5)(a).

Textual Amendments

84C.Further provision: transfer of business of building society to companyU.K.

(1)A transfer under section 84A(5)(b) must be to a company which immediately before the transfer is wholly owned by—

(a)the Bank of England,

(b)a resolution administrator appointed under section 62B(1),

(c)a person nominated by the Bank of England, or

(d)a company which is itself wholly owned by a person within paragraphs (a) to (c).

(2)Where a resolution instrument has made provision under section 84A(5)(b), the building society is dissolved at such time as may be specified in or determined in accordance with the instrument.

(3)In this section, “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares.

Textual Amendments

84D. [F630Transfer to a bridge bank or] Bail-in option: modifications of this Act and other legislationU.K.

[F631(A1)Where a share transfer instrument makes provision under section 84ZA(2) with respect to a building society, the second stabilisation option is to be exercised by making (in that or a subsequent share transfer instrument) provision under section 12(2)(a)—

(a)with respect to the successor company, or

(b)where provision made under section 84ZA includes provision under subsection (3)(g) of that section, with respect to the successor company or its specified parent undertaking.]

(1)Where a resolution instrument makes provision under section 84A(5) with respect to a building society, the exercise of the fourth stabilisation option involves the making (in that or a subsequent resolution instrument) of provision or proposals of any kind mentioned in section 12A(3) to (6)—

(a)with respect to the successor company, or

(b)where provision made under section 84A includes provision under subsection (8) of that section, with respect to the successor company or its specified parent undertaking.

(2)For the purpose of the making of [F632provision as mentioned in subsection (A1)(a) or (b) or] provision or proposals as mentioned in subsection (1)(a) or (b)—

(a)the Table in section 84 does not apply, and

(b)the provisions in the first column of the following Table apply [F633where relevant] —

(i)in relation to the successor company, or

(ii)in a case within subsection [F634(A1)(b) or] (1)(b), in relation to the successor company or its specified parent undertaking,

as they apply in relation to a bank, but subject to the modifications in the third column of the Table.

Table
SectionTopicModification
Section 12ABail-in option

Treat references in subsection (4) to securities issued by a specified bank as references to securities issued by the building society, or by the successor company or its specified parent undertaking.

For subsection (8) substitute—

“(8)Subsection (8ZA) applies where—

(a)the Bank of England has exercised the power in subsection (4) to transfer securities to a resolution administrator; or

(b)by virtue of section 84A, 84B or 84C securities of a successor company or a specified parent undertaking are held by—

(i)the resolution administrator,

(ii)the Bank of England,

(iii)a subscriber to the memorandum of association of a company into which the building society is converted in accordance with section 84B, or

(iv)a person nominated for the purposes of section 84C(1)(c).

(8ZA)The Bank of England must exercise its functions under this Part (see, in particular, section 48V) with a view to ensuring that any securities—

(a)held by a person in the capacity of a resolution administrator,

(b)held by the Bank of England,

(c)held by a person as a result of being a subscriber to the memorandum of association of a company into which the building society is converted in accordance with section 84B,

(d)held by a person as a result of being nominated by the Bank of England for the purposes of section 84C(1)(c),

are so held only for so long as is, in the Bank of England’s opinion, appropriate having regard to the special resolution objectives.”.

Section 12AABail-in: sequence of write-down and conversion of capital instruments and liabilitiesIn relation to the result to be achieved, treat any reference to an instrument or liability of the bank as a reference to an instrument or liability of the building society immediately before the making of the first resolution instrument under section 84A in respect of it.
[F635Section 15 Share transfer instrumentsTreat references in subsection (1) to securities issued by a specified bank as references to securities issued by the building society, or by the successor company or its specified parent undertaking.]
Section 17Effect of transfer
Section 18Continuity
[F636Section 19 Conversion and delisting
Section 20Directors and senior managers

Treat references to a director or senior manager of a specified bank as references to a director or senior manager of the building society or of the successor company or its specified parent undertaking.

In subsection (1A) treat the reference to a specified bank as a reference to the building society or its successor company.

Section 21Ancillary instruments: production, registration etc
Section 21Incidental provision
Section 24Procedure: instrumentsOn the first occasion on which the power to make a share transfer instrument is exercised in relation to a building society, treat the references in this section to a bank as a reference to a building society.
Section 26Supplemental InstrumentsTreat the reference in subsection (3) to securities issued by the bank as a reference to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 26ZAOnward share transfer instrumentsTreat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 30Resolution company: share transfers
Section 31Resolution company: reverse share transfer]
Section 41A, and any other provision so far as relating to property transfer instruments under section 41A(2)Transfer of property subsequent to resolution instrument
[F637Section 44D and any other provision so far as relating to property transfer instruments under section 44D Transfer of property subsequent to share transfer instrumentSection 44D also applies where the Bank of England has made a share transfer instrument in accordance with section 12(2) which provides for the conversion of the building society under section 84ZA(2).]
Section 48BSpecial bail-in provisionThe provision that may be made in accordance with section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes provision replacing a liability (of any form) of the building society or its successor company with a liability of the successor company’s specified parent undertaking.
Section 48CMeaning of “protected deposit”
Section 48DGeneral interpretation of section 48B
Section 48EReport on special bail-in provision
Section 48FPower to amend definition of “excluded liabilities”
Section 48GPriority between creditorsTreat the reference in subsection (1) to the treatment of liabilities on an insolvency as a reference to the treatment of liabilities on the insolvency of a building society.
Section 48HBusiness reorganisation plansTreat the reference in subsection (2)(a) to the bank as a reference to the building society.
Section 48LPowers in relation to securitiesTreat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 48NDirectors and senior managersTreat references to a director or senior manager of a specified bank as references to a director or senior manager of the building society or of the successor company or its specified parent undertaking.
Section 48ODirections in or under resolution instrumentTreat references to a director of the bank as references to a director of the building society or of the successor company or its specified parent undertaking.
Section 48POrders for safeguarding certain financial arrangements
Section 48QContinuity
Section 48RExecution and registration of instruments etc.
Section 48SResolution instruments: general matters
Section 48TResolution instruments: procedureOn the first occasion on which the power to make a resolution instrument is exercised in relation to a building society, treat the first reference in subsection (1) to a bank as a reference to the building society.
Section 48USupplemental resolution instrumentsTreat the reference in subsection (1) to a bank as a reference to the building society.
Section 48VOnward transferTreat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 48WReverse transferTreat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 48XReplacement of Bank’s provisional valuationTreat the first reference in subsection (2)(a) to the bank as a reference to the building society.
Section 48YConsequences of a replacement valuationTreat the first reference in subsection (1) to the bank as a reference to the building society.
Section 48ZTermination rights etc.This section applies to contracts and other agreements entered into by the building society or by the successor company or its specified parent undertaking.
Section 49Compensation ordersTreat references to transferors as including references to the shareholding members of the building society.
[F638Section 52 Transfer to resolution company]
Section 52ACompensation orders: bail-in option
Section 53Onward and reverse transfers etc.
Section 54Independent valuer: compensation scheme order or bail-in compensation order
Section 55Independent valuer: supplemental
Section 56Independent valuer: money
Section 57Valuation principles

Treat the reference in subsection (4) to a bank as a reference to the building society.

Treat the reference in subsection (5) to a transferor as including a reference to a shareholding member of the building society.

Section 58Resolution fund
Section 59Third party compensation: discretionary provisionTreat the reference in subsection (1) to a transferor as including a reference to a shareholding member of the building society.
Section 60AFurther mandatory provision: bail-in provision
Section 60BPrinciple of no less favourable treatment

Treat references to pre-resolution shareholders and creditors of a bank as references to persons who were shareholding members of, or creditors of, the building society, immediately before the coming into effect of the first resolution instrument to be made in respect of the building society.

Treat references to the bank as references to the building society.

Section 61Sources of compensation
Section 62Procedure
Section 62AIndependent valuer: sections 6E and 48X
Sections 62B to 62EResolution administrator
Sections 63, 64 and 66 to 70 where they apply in relation to [F639a share transfer instrument or] a resolution instrument or in relation to a property transfer instrument under section 41A(2)Continuity obligationsTreat references in sections 66(1A) and 68(1)(a) to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 70ASuspension of obligations
Section 70BRestriction of security interests
Section 70CSuspension of termination rights
Section 70DSuspension: general provisions
Section 71PensionsThis section applies in relation to a pension scheme of the building society or of the successor company.
Section 73Disputes
Section 74TaxThis section enables regulations to make provision in relation to the building society, the successor company or its specified parent undertaking.
Section 75Power to change lawTreat the reference in subsection (5)(b) to building societies as including a reference to successor companies and their specified parent undertakings.
[F640Section 78 Public funds: general]
Section 78APre-conditions for financial assistance: duty of Bank to give information
[F641Section 79 Public funds: resolution companyTreat the reference in subsection (1) to a bank as a reference to a building society or its successor company.
Section 80Resolution company: reportTreat the reference in subsection (1) to a bank as a reference to a building society or its successor company.]
Section 80ATransfer for bail-in purposes: reportTreat the reference in subsection (1) to a bank as a reference to the building society.
Section 81AAccounting information to be included in reports under sections 80, 80A(2)(b) and 81
Sections 83ZA to 83Z2Information, investigation and enforcement
Section 89KInsolvency proceedingsTreat the references in paragraphs (a) and (b) of subsection (1) to a relevant firm as references to the building society.
Section 89LRestrictions on disclosure of confidential information
Section 89MGiving of notices, documents etc. under Part 1

(3)Any statutory instrument made under a provision specified in the first column of the Table in subsection (2) applies—

(a)to the successor company, or

(b)in a case within subsection [F642(A1)(b) or] (1)(b), to the successor company or the specified parent undertaking,

as it applies in relation to a bank, but subject to modifications corresponding to those applying to the provision under which it is made and as if references to a provision modified by subsection (2) or (5) were references to that provision as so modified.

(4)Subsection (3) does not apply where the instrument—

(a)states that it does not apply, or

(b)makes express provision about building societies or their successor companies.

(5)Where a resolution instrument makes provision under section 84A in respect of a building society—

(a)section 81BA (groups: bail-in option) applies with the following modifications—

(i)references to a banking group company are to be read as references to a subsidiary of the building society, and

(ii)the power in subsection (1) of that section is to be exercised only where the Bank of England has exercised the stabilisation power in accordance with section 12A(2) in respect of the parent building society;

(b)section 81CA applies as if references to a banking group company were references to a subsidiary of the building society or of the successor company; and

(c)section 81D (interpretation: “banking group company”) does not apply.

[F643(5A)Where—

(a)the third stabilisation option is exercised in connection with the fourth stabilisation option in respect of a building society, and

(b)before the third stabilisation option is exercised—

(i)the building society is converted into a company pursuant to section 84A(5)(a), or

(ii)all the property, rights and liabilities of the building society are transferred to a company pursuant to section 84A(5)(b),

the references to the bank in section 12ZA(1)(a) and any other provision so far as relating to property transfer instruments under section 12ZA include a reference to the successor company.]

(6)Sections 97 to 102D of the Building Societies Act 1986 (transfer of business of building society to commercial company) do not apply where

[F644(a)a share transfer instrument makes provision under section 84ZA, or

(b)] a resolution instrument makes provision under section 84A.

(7)Section 103 of the Building Societies Act 1986 (cancellation of registration) does not apply where

[F645(a)a share transfer instrument makes provision under section 84ZA(3)(e), or

(b)]a resolution instrument makes provision under section 84A(7)(e).

(8)In this section—

  • “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

  • “specified parent undertaking” means a company by which in accordance with provision falling within [F646paragraph (g) of section 84ZA(3) or] paragraph (a) or (b) of section 84A(8) the successor company is (or is to be) wholly owned;

  • “the successor company”, in relation to a building society, means the company into which the building society is converted, or to which the property, rights and liabilities of the building society are transferred, as a result of provision made under section [F64784ZA(2) or] 84A(5).]

Textual Amendments

85Temporary public ownershipU.K.

(1)For the purpose of exercising the [F648fifth] stabilisation option in respect of a building society the Treasury may make one or more orders for the purposes of—

(a)arranging for deferred shares of a building society to be publicly owned,

(b)cancelling private membership rights in the building society,

(c)allowing the building society to continue in business while in public ownership, and

(d)eventually either winding up or dissolving the building society.

(2)For the purpose specified in subsection (1)(a) an order may—

(a)arrange for the transfer of existing deferred shares;

(b)provide for new deferred shares.

(3)For the purpose of arranging for the transfer of existing deferred shares an order may—

(a)provide for deferred shares to be transferred;

(b)make other provision for the purposes of, or in connection with, the transfer of deferred shares (whether or not the transfer has been or is to be effected by the order, by another order under this section or otherwise);

(c)relate to all or any specified class or description of deferred shares issued by the building society.

(4)For the purpose of providing for new deferred shares an order may—

(a)issue or allow the Treasury to issue new deferred shares on behalf of the building society;

(b)specify or allow the Treasury to specify the terms and effect of new deferred shares;

(c)specify or allow the Treasury to specify the recipient of new deferred shares.

(5)For the purpose specified in subsection (1)(b) an order may—

(a)cancel or permit the cancellation of shares (whether or not deferred) in the building society;

(b)confer rights and impose liabilities, or allow them to be conferred and imposed, in place of cancelled shares;

(c)prevent the issue or acquisition of shares in or other rights in respect of the building society otherwise than in accordance with the order.

(6)For the purpose specified in subsection (1)(c) an order may make any provision which the Treasury think desirable to facilitate the business of the building society after the making of provision in accordance with subsections (3) to (5).

(7)An order in respect of a building society may—

(a)make provision expressly or impliedly disapplying or modifying the memorandum or rules of the building society;

(b)disapply or modify an enactment about, or in its application to, building societies.

(8)The following sections apply to orders under this section as to share transfer orders: sections 17, 18, 20, 21, F649... , 23, 25[F650, 48Z], 71, [F65173 and 83Z2].

Textual Amendments

Commencement Information

I121S. 85 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I122S. 85 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

86Distribution of assets on dissolution or winding upU.K.

(1)The Treasury may by order make provision about the distribution of surplus assets of a building society which—

(a)is the subject of a property transfer instrument or order, and

(b)is later wound up or dissolved by consent.

(2)An order under section 85 may include provision about the distribution of surplus assets of the building society if it is later wound up or dissolved by consent.

(3)“Surplus” means remaining after the satisfaction of liabilities to creditors and shareholders.

(4)An order under or by virtue of this section—

(a)may include any provision of a kind that may be made by order under section 90B of the Building Societies Act 1986 (power to alter priorities on dissolution or winding up),

(b)may be made whether or not the power under that section has been exercised, and

(c)shall be treated for all procedural purposes in the same way as an order under that section.

Commencement Information

I123S. 86 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I124S. 86 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

87InterpretationU.K.

(1)Expressions used in this group of sections and in the Building Societies Act 1986 have the same meaning in this group of sections as in that Act.

(2)An order under section 119(1) of that Act defining “deferred shares”—

(a)may make special provision for the meaning of that expression in the application of this group of sections, and

(b)shall otherwise apply to this group of sections as to that Act.

Commencement Information

I125S. 87 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I126S. 87 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

88Consequential provisionU.K.

(1)The Treasury may by order make provision, in addition to the provisions of this group of sections, in consequence of the application of this Part to building societies.

(2)An order may, in particular, amend or modify the effect of an enactment (including a fiscal enactment) passed before the commencement of this Part.

(3)An order—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Commencement Information

I127S. 88 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I128S. 88 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

89Credit unionsU.K.

(1)The Treasury may by order provide for the application of this Part to credit unions (within the meaning of section 31 of the Credit Unions Act 1979) subject to modifications set out in the order.

(2)An order may disapply, modify or apply (with or without modifications) any enactment which relates, or in so far as it relates, to credit unions.

(3)An order—

(a)shall be made by statutory instrument, and

(b)may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(4)Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to credit unions.

(5)In the application of this section to Northern Ireland the reference to section 31 of the Credit Unions Act 1979 is to be treated as a reference to Article 2 of the Credit Unions (Northern Ireland) Order 1985.

Commencement Information

I129S. 89 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I130S. 89 in force at 21.2.2009 in so far as not already in force by S.I. 2009/296, arts. 2, 3, Sch. para. 1

[F652Investment firmsU.K.

Textual Amendments

F652S. 89A and cross-heading inserted (5.6.2014 for specified purposes, 1.8.2014 in so far as not already in force) by Financial Services Act 2012 (c. 21), ss. 101(5), 122(3) (with Sch. 20); S.I. 2014/1447, art. 2(e); S.I. 2014/1847, art. 2

89AApplication to investment firmsU.K.

(1)This Part applies to investment firms as it applies to banks, subject to the modifications in [F653the following Table—

ProvisionModification
Section 1Ignore subsection (2)(b).
[F654Section 3 In subsection (1), in the definition of “normal insolvency proceedings” ignore the reference to the bank insolvency procedure.]
Section 4Ignore subsections (2)(b), (6) and (7)(b).
Section 5Ignore subsection (1)(b).
Section 7Ignore subsection (7).
F655. . .F655. . .
Section 8ZAIn subsection (5), ignore the reference to the bank insolvency procedure.
Section 12AA [F656References to normal insolvency proceedings do not include a reference to the bank insolvency procedure.]
Section 14Ignore subsection (5).
Section 60In subsection (3)(c), ignore the reference to bank insolvency.
Section 60BIn subsection (4), ignore the reference to bank insolvency.
Section 63In subsection (1A), ignore the reference to bank insolvency.
Section 66In subsection (1ZA), ignore the reference to bank insolvency.]

[F657(2)In the case of investment firms which are FCA-regulated investment firms, in subsection (1) the reference to this Part is a reference to this Part as it applies to FCA-regulated banks by virtue of section 83A.

(3)In this section—

  • “FCA-regulated bank” has the meaning given by section 83A(2);

  • “FCA-regulated investment firm” means an investment firm which does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000.]]

Textual Amendments

F655Words in s. 89A(1) Table omitted (16.12.2016) by virtue of The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 23

F657S. 89A(2)(3) substituted for s. 89A(2) (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 101(3)

F658... U.K.

Textual Amendments

F65889BApplication to recognised central counterparties U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F65889C Recognised central counterparty rulesU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F65889D Recognised central counterparty membershipU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F65889ERecognition of transferee companyU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F65889F Recognised central counterparty compensation ordersU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F65889GInterpretation: “recognised central counterparty” &c.U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F659Chapter 6U.K.Third-country resolution actions

Textual Amendments

Third-country resolution actionsU.K.

89H.Recognition of third-country resolution actionsU.K.

(1)This section applies where the Bank of England is notified of third-country resolution action in respect of a third-country institution or third-country parent undertaking.

(2)The Bank must make an instrument which—

(a)recognises the action, or

(b)refuses to recognise the action, or

(c)recognises part of the action and refuses to recognise the remainder.

An instrument within paragraph (a), (b) or (c) is a “third-country instrument” (as is an instrument under section 89I(4)(b)).

(3)The Bank may only make a decision under subsection (2) with the approval of the Treasury.

(4)Recognition of the action (or a part of it) may be refused only if the Bank and the Treasury are satisfied that one or more of the following conditions are satisfied—

(a)recognition would have an adverse effect on financial stability in the United Kingdom F660...;

(b)the taking of action in relation to a branch located in the United Kingdom of a third-country institution is necessary to achieve one or more of the special resolution objectives;

(c)under the third-country resolution action creditors (including in particular depositors) located or payable in [F661the United Kingdom] would not, by reason of being located or payable in the [F662United Kingdom], receive the same treatment as creditors (including depositors) who are located or payable in the F663... country concerned and have similar legal rights;

(d)recognition of, and taking action in support of, the third-country resolution action (or the part) would have material fiscal implications for the United Kingdom;

(e)recognition would be unlawful under section 6 of the Human Rights Act 1998 (public authority not to act contrary to Human Rights Convention) F664....

(5)The recognition of third-country resolution action (or any part of it) is without prejudice to any normal insolvency proceedings.

F665(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)In this section—

  • F666...

  • “group” has the meaning given by section 474 of the Companies Act 2006,

  • F666...

  • “third-country group company” means an undertaking—

    (a)

    which is (or, but for third-country resolution action or the exercise of a stabilisation power, would be) in the same group as a third-country institution or a third-country parent undertaking, and

    (b)

    in respect of which any conditions specified in an order made by the Treasury under section 81D are met (applying that order as if references to the bank were references to the third-country institution or third-country parent undertaking),

  • [F667“third-country institution” means an institution established in a country or territory other than the United Kingdom that would, if it were established within the United Kingdom, be regarded as a bank, building society, credit union or investment firm;]

  • “third-country parent undertaking” [F668means a parent undertaking, parent financial holding company or a parent mixed financial holding company established in a country or territory outside the United Kingdom];

  • “third-country resolution action” means action under the [F669law of a country or territory outside the United Kingdom] to manage the failure or likely failure of a third-country institution [F670or third-country parent undertaking] —

    (a)

    the anticipated results of which are, in relation to a third-country institution or third-country parent undertaking F671..., broadly comparable to results which could have been anticipated from the exercise of a stabilisation option in relation to an entity in the United Kingdom corresponding to the institution or undertaking, and

    (b)

    the objectives of which are broadly comparable, in relation to the [F672country or territory concerned], to the objectives in section 4 as they apply in relation to the United Kingdom;

  • F673...

Textual Amendments

Modifications etc. (not altering text)

C15S. 89H(2) excluded (16.12.2022) by S.I. 2019/855, reg. 97A(1) (as inserted by The Russia (Sanctions) (EU Exit) (Amendment) (No. 17) Regulations 2022 (S.I. 2022/1331), regs. 1(2)(b), 19)

89I.Effect of recognition of third-country resolution action by Bank of EnglandU.K.

(1)This section applies where an instrument under section 89H recognises any third-country resolution action (or a part of it).

(2)The third-country resolution action (or part) produces the same legal effects in any part of the United Kingdom as it would have produced had it been made (with due authority) under the law of that part of the United Kingdom.

(3)For the purposes of supporting, or giving full effect to, the third-county resolution action (or the part), the Bank of England may exercise, in relation to a third-country institution, a third-country parent undertaking or another third-country group company, one or more of the stabilisation options, or one or more of the stabilisation powers, available to the Bank in relation to a similar entity in the United Kingdom.

(4)But, for the purposes of exercising a power by virtue of subsection (3), provision which could otherwise be made under this Part in a mandatory reduction instrument, share transfer instrument, property transfer instrument or resolution instrument may instead be made in—

(a)the instrument made under section 89H recognising the third-country resolution action (or part), or

(b)a further instrument made by the Bank of England under this section.

An instrument under paragraph (b) is a “third-country instrument” (as is an instrument under section 89H(2)(a), (b) or (c)).

(5)This Part (other than this section) applies in relation to the exercise of any power by virtue of subsection (3), subject to subsections (6) to [F674(9A)] and any other necessary modifications.

(6)Section 4 (special resolution objectives) has effect as if after subsection (9) there were inserted—

“(9A)Objective 8 is to support third-country resolution action with a view to promoting objectives which, in relation to the [F675country or territory] concerned, correspond to Objectives 1 to 7 in relation to the United Kingdom.”.

(7)Sections 7 to 8ZA do not apply.

(8)Section 60B (principle of no less favourable treatment) applies in relation to compensation arrangements in the case of third-country instruments in relation to any third-country resolution action (or a part of it) as if—

(a)references to the initial instrument were to the first third-country instrument under section 89H recognising that action (or part), and

(b)in subsection (3) the reference to the coming into effect of the initial instrument were a reference to the taking of the third-country resolution action recognised (or recognised in part) by that instrument.

(9)Section 81B, 81ZBA and 81BA have effect in relation to the exercise of a stabilisation power in respect of a third-country group company as if for subsections (2) and (3) (in each case) there were substituted—

“(2)Condition 1 is that third-country resolution action has been taken in respect of a third-country institution, a third-country parent undertaking or another third-country group company, in the same group.

(3)Condition 2 is that the Bank of England is satisfied that the exercise of the power in respect of the third-country group company is necessary, having regard to the public interest in the stability of the financial systems of the United Kingdom and the [F676country or territory] concerned.

(3A)In subsections (2) and (3) “third-country resolution action”, “third-country institution”, “third-country parent undertaking”, [F677and “third-country group company”] have the meaning given by section 89H(7).”.

[F678(9A)Sections 81ZZBA, 81ZZBB, 81ZBB, 81ZBC, 81BB and 81BC do not apply.]

(10)Section 89H(7) applies for the purposes of this section.

Textual Amendments

89J.Third-country instruments: supplementary provisionU.K.

(1)Section 23 (incidental provision) applies to a third-country instrument as it applies to a share transfer instrument.

(2)Section 24 (procedure: instruments) applies to a third-country instrument as it applies to a share transfer instrument, except that references in that section to the bank are to be read as references to the third-country institution, third-country parent undertaking or other third-country group company, to which the third-country instrument relates.

(3)Section 76 (international obligation notice: general) applies in relation to the making of a third-country instrument under section 89H or 89I as it applies in relation to the exercise of a stabilisation power, except that—

(a)for the purposes of section 76(3), section 4 is to be read subject to the modification in section 89I(6), and

(b)in subsection (4), the reference to a bank is to be read as a reference to a third-country institution, a third-country parent undertaking or another third-country group company, in respect of which a third-country instrument is made.

(4)Section 77 (international obligation notice: bridge bank) applies where the Bank of England has, by virtue of section 89I, transferred all or part of the business of a third-country institution, a third-country parent undertaking or another third-country group company, to a bridge bank as it applies where the Bank of England has transferred all or part of the business of a bank or banking group company to a bridge bank.

(5)Section 89I(7) applies for the purposes of this section.

[F679Chapter 6AU.K.RESOLUTION OF UK BRANCHES OF THIRD-COUNTRY INSTITUTIONS

Textual Amendments

U.K.

89JAResolution of UK branches of third-country institutionsU.K.

(1)The provisions of Chapters 1, 3 and 4 of this Part apply in relation to UK branches subject to the modifications specified in subsections (4) to (10) and in the Table in subsection (11).

(2)In this Chapter—

(a)“UK branch” means a branch located in the United Kingdom of a third-country institution authorised for the purpose of the Financial Services and Markets Act 2000 by the PRA or the FCA,

(b)references to the business of a UK branch are to—

(i)any rights and liabilities of the third-country institution arising as a result of the operations of the UK branch, and

(ii)any other property in the United Kingdom of the third-country institution,

(c)“third-country institution” has the [F680same meaning as in section 89H], and a third-country institution is “FCA-regulated” if it does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000,

(d)references to a third-country institution are to the third-country institution in respect of whose UK branch the Bank of England—

(i)is considering making a property transfer instrument, or

(ii)has made a property transfer instrument,

(e)“immediate group” has the meaning given by section 421ZA of the Financial Services and Markets Act 2000 .

(3)For the purposes of subsection (2)(b) liabilities arising as a result of the operations of the UK branch include liabilities in respect of deposits—

(a)which are held at the UK branch, or

(b)in respect of which withdrawals may be made at the UK branch,

and “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 , but ignoring the exclusions in article 6.

(4)For section 6E (pre-resolution valuation) , substitute—

“6E(1)Before the Bank of England makes a property transfer instrument in respect of a UK branch, it must ensure that the business of the UK branch is valued.

(2)Unless subsection (3) applies, the Bank of England must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a valuation for the purposes of subsection (1).

(3)Where the Bank of England considers that the urgency of the case makes it appropriate to make a property transfer instrument before a valuation can be carried out by a person appointed in accordance with subsection (2), the Bank may carry out a provisional valuation of the business of the UK branch for the purposes of subsection (1).

(4)The purpose of a valuation carried out pursuant to subsection (1) is to—

(a)inform the decision as to—

(i)which stabilisation option should be employed,

(ii)what property, rights or liabilities (if any) are to be transferred by a property transfer instrument,

(iii)the value of any consideration to be paid to the third-country institution for any property, rights or liabilities so transferred, and

(iv)(where special bail-in provision is being made in the property transfer instrument) the extent to which any eligible liabilities should be modified or converted, and

(b)ensure that the full extent of any losses on the business of the UK branch is appreciated at the time the Bank of England makes a property transfer instrument.

(5)In carrying out a valuation required under subsection (1), the person carrying out the valuation must—

(a)make prudent assumptions as to possible rates of default and the severity of losses suffered by the third-country institution;

(b)disregard potential financial assistance which may be provided by the relevant third-country authorityF681..., the Bank of England or the Treasury after the Bank has made a property transfer instrument (except for ordinary market assistance offered by the Bank on its usual terms),

(c)take account of the fact that—

(i)the Bank of England and the Treasury may recover expenses incurred in connection with the making of a property transfer instrument under section 58(2)(b),

(ii)the Bank of England and the Treasury may charge interest or fees in respect of any loans or guarantees provided to the third-country institution after the Bank has made a property transfer instrument in respect of its UK branch.

[F682(5A)In subsection (5)(b) “relevant third-country authority” means an authority in a country or territory outside the United Kingdom that has functions corresponding to the stabilisation powers of the Bank of England, the FCA or the PRA.]

[F683(6) The valuation carried out under this section must follow the methodology specified in—

(a)any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are [F684assimilated] law, or

(b)technical standards made under subsection 12(a).]

(7)A valuation under subsection (1) must be accompanied by—

(a)a balance sheet of the business of the UK branch as at the date of the valuation,

(b)a report on the financial position of the UK branch,

(c)an analysis and an estimate of the accounting value of the property and rights of the third-country institution which form part of the business of the UK branch,

(d)a list of the outstanding liabilities of the third-country institution which form part of the business of the UK branch (including any off-balance sheet liabilities), with the creditors subdivided into classes according to the priority their claims would receive in insolvency proceedings, and

(e)an estimate of the amount that each class of creditors and shareholders might be expected to receive if the third-country institution went into insolvency proceedings.

(8)For the purposes of subsection (7) “insolvency proceedings” means such insolvency proceedings (whether or not under the law of a [F685country or territory outside the United Kingdom]) as the person carrying out the valuation, after consultation with the Bank of England and the Treasury, considers relevant.

(9)Where appropriate, the information in subsection (7)(c) may be supplemented by an analysis and estimate of the value of the business of the UK branch on a market value basis in order to inform the decision referred to in paragraph (a)(ii) or (iii) of subsection (4).

(10)Where a provisional valuation is carried out under subsection (3)—

(a)the Bank of England need only comply with subsection (7) as far as it is reasonable to do so in the circumstances, and

(b)the requirement in subsection (8) to consult the Bank of England does not apply.

[F686(11) A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the third-country institution in accordance with—

(a)any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are [F684assimilated] law, or

(b)technical standards made under subsection (12)(b).

(12)The Bank of England may make technical standards relating to—

(a)the methodology for assessing the value of the assets and liabilities of a branch for the purposes of a valuation under this section;

(b)the methodology for calculating and including a buffer for additional losses in the provisional valuation.”]

(5)For section 7 (general conditions), substitute—

“7(1)The Bank of England may make a property transfer instrument in respect of a UK branch only if the Treasury has approved the making of the instrument, and one of the following applies—

(a)the PRA (or in the case of a third-country institution which is FCA-regulated, the FCA) is satisfied that Condition 1 is met, and the Bank of England is satisfied that Conditions 2, 4 and 5 are met, or

(b)the Bank of England is satisfied that Conditions 3 and 4 are met, or

(c)the Bank of England is satisfied that Condition 4 is met and Condition 5 is met by virtue of subsection 6(a).

(2)Condition 1 is that the third-country institution is failing or likely to fail.

(3)Condition 2 is that, having regard to timing and other relevant circumstances, it is not reasonably likely that action will be taken by or in respect of the third-country institution that will result in Condition 1 ceasing to be met.

(4)Condition 3 is that—

(a)the third-country institution is unable or unwilling, or is likely in the near future to be unable or unwilling, to pay its debts or other liabilities owed to [F687UK] creditors or otherwise arising from the business of the UK branch as they fall due, and

(b)no third-country resolution action has been taken, no normal insolvency proceedings have been initiated, and no such action or proceedings are likely in the near future to be taken or initiated, in relation to the institution.

(5)Condition 4 is that making a property transfer instrument is necessary having regard to the public interest in the advancement of one or more of the special resolution objectives.

(6)Condition 5 is that—

(a)third-country resolution action has been taken, or the Bank of England has been notified that such action will be taken, in relation to the third-country institution and the Bank has refused or proposes to refuse to recognise such action for one or more of the reasons specified in section 89H(4), or

(b)third-country resolution action has not been, and is not likely to be, taken in relation to the third-country institution.

(7)For the purposes of Condition 1, a third-country institution is failing or likely to fail if it is failing, or is likely to fail, to satisfy the threshold conditions in circumstances where that failure would justify the variation or cancellation by the PRA (or in the case of an FCA-regulated third-country institution, the FCA) under section 55J of the Financial Services and Markets Act 2000 of the institution's permission under Part 4A of that Act to carry on one or more regulated activities in the United Kingdom.

(8)“The threshold conditions” means the threshold conditions, as defined by subsection (1) of section 55B of the Financial Services and Markets Act 2000, for which the PRA (or in the case of an FCA-regulated third-country institution, the FCA) is treated as responsible under subsection (2) of that section.

(9)For the purposes of Condition 3—

  • [F688“UK creditor”, in relation to a third-country institution, means a creditor of the institution who—

    (a)

    in the case of an individual, is ordinarily resident in the United Kingdom; and

    (b)

    in the case of a body corporate or unincorporated association, has its head office in the United Kingdom.]

(10)For the purposes of Conditions 3 and 5, “third-country resolution action” has the meaning given in section 89H(7).

(11)Before determining that Condition 1 is met, the PRA (or in the case of an FCA-regulated third-country institution, the FCA) must consult the Bank of England.

(12)Before determining whether or not Condition 2 or 4 is met the Bank of England must, subject to subsection (13), consult—

(a)the PRA,

(b)the FCA, and

(c)the Treasury.

(13)In the case of an FCA-regulated third-country institution, the Bank of England need only consult the PRA before determining whether or not Condition 2 or 4 is met if the third-country institution has as a member of its immediate group a PRA-authorised person.”.

(6)For section 7A (effect on other group members, financial stability in EU etc) substitute—

Where the Bank of England is considering making a property transfer instrument in respect of a UK branch of a third-country institution which is a member of a group, the Bank must have regard to—

(a)the need to minimise the effect of making the property transfer instrument on other undertakings in the same group,

(b)the need to minimise any adverse effects on the financial stability of the [F689United Kingdom], and

(c)the potential effect of making the property transfer instrument on the financial stability of the [F690country or territory] in which the head office of the third-country institution is established, and any other [F691country or territory (other than the United Kingdom)] in which any member of the group is operating.”.

(7)For section 44B (property transfer instruments: special bail-in provision), substitute—

“44B(1)A property transfer instrument within subsection (2) may make special bail-in provision (see section 48B) with respect to the liabilities of the third-country institution or the resolution company which are being transferred by that instrument (“transferred liabilities”).

(2)The instruments referred to in subsection (1) are—

(a)a property transfer instrument under section 11(2), 12(2) or 12ZA(3),

(b)a supplemental property transfer instrument under section 42 in relation to which the original instrument is—

(i)a property transfer instrument under section 11(2), 12(2) or 12ZA(3), or

(ii)an onward property transfer instrument under section 43(2), or

(c)an onward property transfer instrument under section 43(2).

(3)In the case of—

(a)a property transfer instrument under section 12(2) or 12ZA(3),

(b)a supplemental property transfer instrument under section 42 in relation to which the original instrument is—

(i)a property transfer instrument under section 12(2) or 12ZA(3), or

(ii)an onward property transfer instrument under section 43(2), or

(c)an onward property transfer instrument under section 43(2),

the power under subsection (1) to make the provision described in section 48B(1)(a) (see also rule 2(a) and (b) of section 48B(5)) includes power to make the provision referred to in subsection (4).

(4)The provision referred to in subsection (3) is provision replacing a transferred liability (of any form)—

(a)of the third-country institution mentioned in subsection (1), in the case of instruments within subsection (3)(a) and (b)(i),

(b)of the resolution company mentioned in section 43(1), in the case of instruments within subsection (3)(b)(ii) and (c),

with a relevant security (of any form or class).

(5)The following are relevant securities for the purpose of subsection (4)—

(a)where the instrument within subsection (3)(a), or the original instrument, is made under section 12, a security of the bridge bank mentioned in section 12(1),

(b)where the instrument within subsection (3)(a), or the original instrument, is made under section 12ZA, a security of the asset management vehicle mentioned in section 12ZA(1).

(6)In subsection (5), references to the original instrument are—

(a)in relation to an instrument within subsection (3)(b), the original instrument referred to in that paragraph,

(b)in relation to an instrument within subsection (3)(c), the original instrument as defined in section 43(1).

(7)Where securities of the bridge bank or asset management vehicle (“B”) are, as a result of subsection (3), held by a person other than the Bank of England, that does not prevent B from being regarded for the purposes of this Part (see particularly section 12(1A) and 12ZA(2)) as being wholly owned by the Bank of England, as long as the Bank of England is entitled to exercise, or control the exercise of, voting rights in respect of all the ordinary shares issued by B.”.

(8)For section 48B (special bail-in provision), substitute—

“48B(1)“Special bail-in provision”, for the purposes of section 44B(1), means any of the following (or any combination of the following)—

(a)provision modifying, or changing the form of, a relevant liability;

(b)provision that a contract under which the relevant institution has a relevant liability is to have effect as if a specified right had been exercised under it.

(2)“Special bail-in provision”, for the purposes of section 44B, also includes any associated provision (see subsection (3)) that the Bank of England may think it appropriate to make in consequence of any provision under subsection (1) that—

(a)is made in the same property transfer instrument, or

(b)has been made in another property transfer instrument in respect of the UK branch, or (where the institution in relation to which special bail-in provision is made is a resolution company) in respect of the resolution company.

(3)“Associated provision” means provision modifying a contract under which a company which is a banking group company in relation to the third-country institution has a liability (whether or not the institution in relation to which special bail-in provision is made is the third-country institution).

(4)A power to make special bail-in provision—

(a)may be exercised only for the purpose of, or in connection with, reducing or deferring a relevant liability of the relevant institution;

(b)may not be exercised so as to affect any excluded liability.

(5)The following rules apply to the interpretation of subsection (1). 1 The reference to modifying a relevant liability includes a reference to modifying the terms (or the effect of the terms) of a contract under which the relevant institution has a liability. 2 The reference to changing the form of a relevant liability, includes, for example—

(a)converting an instrument under which the relevant institution owes a relevant liability from one form or class to another,

(b)replacing such an instrument with another instrument of a different form or class, or

(c)converting those liabilities into securities issued by a bridge bank or a UK parent undertaking.

(6)For the purposes of rule 2 in subsection (5)—

  • “parent undertaking” has the meaning given by Article 4.1(15)(a) of the capital requirements regulation, and

  • “UK parent undertaking” means a parent undertaking that is incorporated in, or formed under the law of, any part of the United Kingdom.

(7)Examples of special bail-in provision include—

(a)provision that transactions or events of any specified kind have or do not have (directly or indirectly) specified consequences or are to be treated in a specified manner for specified purposes;

(b)provision discharging persons from further performance of obligations under a contract and dealing with the consequences of persons being so discharged.

(8)The form and class of the instrument (“the resulting instrument”) into which an instrument is converted, or with which it is replaced, do not matter for the purposes of paragraphs (a) and (b) of rule 2 in subsection (5); for instance, the resulting instrument may (if it is a security) fall within Class 1 or any other Class in section 14.

(9)Liabilities of the relevant institution are “excluded liabilities” if they are—

(a)liabilities listed in subsection (10), or

(b)liabilities which the Bank of England has excluded under subsection (12) from the application of special bail-in provision.

(10)The following liabilities of the relevant institution are the excluded liabilities referred to in subsection (9)(a)—

(a)liabilities representing protected deposits;

(b)any liability, so far as it is secured;

(c)liabilities that the relevant institution has by virtue of holding client assets;

(d)liabilities with an original maturity of less than 7 days owed by the relevant institution to a credit institution or investment firm;

(e)liabilities with a remaining maturity of less than 7 days arising from participation in designated settlement systems and owed to such systems or to operators of, or participants in, such systems;

[F692(ea)liabilities with a remaining maturity of less than 7 days owed by the relevant institution to a recognised central counterparty F693... or a third country central counterparty;]

(f)liabilities owed to an employee or former employee in relation to salary or other remuneration, except—

(i)variable remuneration that is not regulated by a collective bargaining agreement, and

(ii)variable remuneration of material risk takers [F694within the meaning of rule 3 of Part 152 (remuneration) of the PRA rulebook (other than persons deemed by virtue of rule 3.2 not to be material risk takers and notified to the PRA in accordance with rule 3.2)];

(g)liabilities owed to a pension scheme, except for liabilities owed in connection with variable remuneration of the kind mentioned in paragraph (f)(i) or (ii);

(h)liabilities owed to creditors arising from the provision to the relevant institution of goods or services (other than financial services) that are critical to the daily functioning of the operations of the third-country institution or of its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company);

(i)liabilities owed by the relevant institution to the scheme manager of [F695the FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) or (4) of the Financial Services and Markets Act 2000];

[F696(j)liabilities owed by the relevant institution to another institution or a banking group company which (in either case)—

(i)is part of the same resolution group as the relevant institution, and

(ii)is not itself a resolution entity,

where the liabilities do not rank below ordinary non-preferential debts under the hierarchy of claims in normal insolvency proceedings.]

(11)The following special rules apply in cases involving banking group companies (whether or not the institution in relation to which special bail-in provision is made is the third-country institution)—

(a)a liability is not within subsection (10)(d) if the credit institution or investment firm to which the liability is owed is a banking group company in relation to the third-country institution (see section 81D);

(b)in subsection (10)(h) the reference to creditors does not include companies which are banking group companies in relation to the third-country institution.

(12)The Bank of England may, in a property transfer instrument, exclude any [F697bail-in] liability or class of [F697bail-in] liabilities from the application of any special bail-in provision in relation to a relevant institution under section 44B if, and only if, the Bank of England—

(a)thinks the exclusion is justified on one or more of the grounds set out in subsection (14), F698...

F698(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13)The power conferred by subsection (12) may be exercised to exclude only part of [F699a bail-in liability], or part of each of [F700the bail-in liabilities] of a particular class; and where it is so exercised that part is treated as [F699a bail-in liability] excluded under that subsection and the remainder is treated as [F699a bail-in liability] which has not been so excluded.

(14)The grounds are—

(a)that it is not reasonably possible to give effect to special bail-in provision in relation to the liability or class within a reasonable time;

(b)that the exclusion is necessary and proportionate to achieve the continuity of critical functions and core business lines in a manner that maintains the ability of the third-country institution or its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company) to continue key operations, services and transactions;

(c)that the exclusion is necessary and proportionate to avoid giving rise to widespread contagion, in particular as regards protected deposits held by natural persons or [F701micro, small and medium-sized enterprises], which would severely disrupt the functioning of financial markets, including financial market infrastructures, in a manner that could cause a serious disturbance to the economy of [F702the United Kingdom];

(d)that the making of special bail-in provision in relation to the liability would cause a reduction in value such that the losses borne by other creditors would be higher than if the liability were excluded.

(15)When deciding whether to exclude liabilities under subsection (12) or (13), the Bank of England must give due consideration to—

(a)the principle that all the relevant liabilities of the relevant institution ought to be treated in accordance with the priority they would enjoy if the relevant institution went into insolvency proceedings, and

(b)the principle that any creditors who would have equal priority in insolvency proceedings ought to bear losses on an equal footing with each other,

and for the purposes of this subsection “insolvency proceedings” means such insolvency proceedings (whether or not under the law of a [F703country or territory outside the United Kingdom]) as the Bank of England, after consultation with the Treasury, considers relevant.

(17)For the purposes of subsection (14)—

  • [F704“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for the third-country institution or its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company);]

  • “protected deposit” has the meaning given by section 48C, and

  • [F705“micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC.]

[F706(17A)For the purposes of the definition of “core business lines” Article 7 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of core business lines) applies.

(17B)The Treasury may by regulations made by statutory instrument specify criteria for the determination of the business lines and associated services referred to in the definition of “core business lines”.

(17C)The power conferred by subsection (16) includes—

(a)power to amend or revoke Article 7 of Commission Delegated Regulation (EU) 2016/778; and

(b)power to amend or repeal subsection (17A).

(17D)A statutory instrument containing regulations under subsection (17B) is subject to annulment in pursuance of a resolution of either House of Parliament.]

(18)For the purposes of this section—

(a)“relevant liability” means a liability of a third-country institution or resolution company which is transferred in the property transfer instrument which makes special bail-in provision,

(b)“relevant institution” means the third-country institution or resolution company whose liabilities are so transferred.”.

(9)For section 48X (replacement of Bank's provisional valuation), substitute—

“48X(1)Where the Bank of England has carried out a provisional valuation under section 6E(3) before making a property transfer instrument in relation to a UK branch, the Bank must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a full valuation in accordance with this section as soon as reasonably practicable.

(2)The purpose of the valuation carried out under subsection (1) is to—

(a)ensure the full extent of any losses on the property and rights of the third-country institution which formed part of the business of the UK branch is recognised in the accounting records of the third-country institution, and

(b)inform a decision by the Bank as to whether—

(i)additional consideration should be paid by a bridge bank or asset management vehicle for any property, rights or liabilities transferred by the property transfer instrument, or

(ii)the Bank should exercise the power under section 48Y(1) to increase a liability which has been reduced by the property transfer instrument.

(3)A valuation carried out under subsection (1) must comply with subsections (5) and (6) of section 6E, and be accompanied by the information required in subsection (7) of that section.”.

(10)For section 48Y (consequences of a replacement valuation)—

“48Y(1)Where the independent valuation carried out under section 48X(1) produces a higher valuation of the net asset value of the business of the UK branch transferred by the property transfer instrument than the provisional valuation carried out under section 6E(3), the Bank of England may—

(a)modify any liability of the third-country institution which has been reduced or deferred by the property transfer instrument so as to increase or reinstate that liability; or

(b)instruct a resolution company to pay additional consideration to the third-country institution for any property, rights or liabilities transferred to the resolution company by a property transfer instrument.

(2)The power in subsection (1)(a)—

(a)may not be exercised so as to increase the value of the liability beyond the value it would have had if the property transfer instrument which reduced or deferred it had not been made, and

(b)must be exercised by a supplemental property transfer instrument (whether or not that instrument contains any other provision authorised by this Part).”

(11)The Table mentioned in subsection (1) is as follows—

Table of Modifications
ProvisionModification
Sections 6A (cases where mandatory write-down, conversion, etc applies) to 6D (mandatory reduction instruments: supplementary matters) Ignore sections 6A to 6D.
Section 8 (specific condition: private sector purchaser, bridge bank or asset management vehicle)Ignore section 8.
Section 8ZA (specific conditions: asset management vehicle)

In subsection (1) treat the reference to a bank as a reference to a UK branch.

In subsection (2), treat the first reference to the bank as a reference to the UK branch, and the second reference to the bank as a reference to the third-country institution.

In subsection (3)(b) treat the first reference to the bank as a reference to the third-country institution.

If the third-country institution is FCA-regulated, ignore subsection (4) (a) unless the third-country institution has as a member of its immediate group a PRA-authorised person.

In subsection (6), ignore the reference to section 8.

Section 9 (specific conditions: temporary public ownership)Ignore section 9.
Section 11 (private sector purchaser)

In subsection (1), treat the reference to the bank as a reference to the UK branch.

Ignore subsection (2)(a).

Section 11A (private sector purchaser: marketing)

In subsections (1), (2)(c) and (5), treat the reference to the bank as a reference to the third-country institution.

In subsection (1), ignore paragraph (a).

In subsections (2)(d) and (3)(a), ignore the reference to securities.

Section 12 (bridge bank)

In subsection (1), treat the reference to the bank as a reference to the UK branch.

In subsection (1A)(c), treat the reference to the bank or its business as a reference to the business of the UK branch.

Ignore subsection (2)(a).

Section 12ZA (asset management vehicle)

In subsection (1)(a), treat the reference to the bank as a reference to the UK branch.

In subsection (1)(b)—

(a) ignore the reference to shares,

(b) treat the reference to property, rights or liabilities of the bank as a reference to property, rights or liabilities of the third-country institution which form part of the business of the UK branch.

In subsection (2)(c) treat the first reference to banks as including a reference to third-country institutions.

Sections 12A (bail-in option), 12AA (bail-in: sequence of write down and conversion of capital instruments and liabilities) and 13 (temporary public ownership)Ignore sections 12A, 12AA and 13.
Sections 15 (share transfer instrument) to 29 (reverse share transfer orders)Ignore sections 15 to 29.
Sections 30 (resolution company: share transfers) and 31 (resolution company: reverse transfer)Ignore sections 30 and 31.
Section 33 (property transfer instrument)

In subsections (1) and (2), treat references to property, rights or liabilities of a specified bank as references to property, rights or liabilities of the third-country institution which form part of the business of a specified UK branch, or to property, rights or liabilities of a resolution company.

Ignore subsection (3).

Section 36A (directors and senior managers)

In subsections (1) and (2), ignore each reference to a director.

In subsections (1) and (4) treat each reference to a specified bank as a reference to a specified UK branch.

In subsection (2) treat the reference to a specified bank as a reference to the third-country institution.

In subsection (5), treat the first reference to a bank as a reference to a UK branch or a third-country institution, and ignore the words “(whether or not it is a bank)”.

Section 39A (banks which are clearing houses) Ignore section 39A.
Section 41 (procedure)

In subsection (1)—

(a) treat the first reference to a bank as a reference to a UK branch,

(b) in paragraph (a), treat the reference to the bank as a reference to the third-country institution,

(c) if the third-country institution is FCA-regulated, ignore paragraph (c).

In subsection (2) treat the references to the bank as references to the third-country institution.

In subsection (4), treat the first reference to a bank as a reference to a UK branch or a third-country institution, and ignore the words “even if it is not a bank”.

Section 41A (transfer of property subsequent to resolution instrument) Ignore section 41A.
Section 42 (supplemental instruments)

In subsections (1) and (6), ignore the reference to section 41A(2).

In subsection (4), ignore the reference to section 8.

If the third-country institution is FCA-regulated, ignore subsection (5)(a) unless the third-country institution has as a member of its immediate group a PRA-authorised person.

Section 42A (private sector purchaser: reverse property transfer)

In subsection (1), treat the reference to property, rights or liabilities of a bank as a reference to property, rights or liabilities of a third-country institution which form part of the business of a UK branch.

In subsection (5), ignore the reference to section 8.

If the third-country institution is FCA-regulated, ignore subsection (6)(a) unless the third-country institution has as a member of its immediate group a PRA-authorised person.

Section 43 (onward transfer)

In subsection (6), ignore the reference to section 8.

If the third-country institution is FCA-regulated, ignore subsection (7)(a) unless the third-country institution has as a member of its immediate group a PRA-authorised person.

Section 44 (resolution company: reverse property transfer)

In subsection (5), ignore the reference to section 8.

If the third-country institution is FCA-regulated, ignore subsection (6)(a) unless the third-country institution has as a member of its immediate group a PRA-authorised person.

Section 44A (bail-in: reverse property transfer) Ignore section 44A.
Section 44BA (property transfer instruments and bail-in: supplementary matters) Ignore section 44BA.
Section 44C (report on special bail-in provision)

In subsection (4), treat each reference to “on a liquidation” as a reference to “in insolvency proceedings”.

In subsection (4)(a), treat the reference to “the liabilities of the bank” as a reference to “the relevant liabilities of the third-country institution” (and for this purpose, “relevant liability” has the meaning given in section 48B(17)).

In subsection (4), after paragraph (b), insert “ and for the purposes of this subsection “insolvency proceedings” means such insolvency proceedings (whether or not under the law of a [F707country or territory outside the United Kingdom)] as the Bank of England, after consultation with the Treasury, considers relevant. ”

Sections 44D (bridge bank: supplemental property transfer powers) to 46 (temporary public ownership: reverse property transfer)Ignore sections 44D to 46.
Section 47 (restriction of partial transfers)

In subsection (1), treat the reference to a bank as a reference to a third-country institution.

In subsection (1A), treat the first reference to a bank as a reference to a third-country institution, and ignore the words “(even if it is not a bank)”.

Section 48A (creation of liabilities) In subsection (1) ignore the reference to sections 44A(3)(b), 44D(3)(b), 44E(3)(b), 45(3)(b) and 46(3)(b).
Section 48C (meaning of “protected deposit”) In subsection (4), treat the reference to section 48B(8)(a) as a reference to section 48B(10)(a).
Section 48D (general interpretation of section 48B)In the definition of client assets, treat the reference to the bank as a reference to the third-country institution.
Section 48E (report on special bail-in provision)Ignore section 48E.
Section 48F (power to amend definition of “excluded liabilities”)In subsection (1) treat the reference to section 48B(8) as including a reference to section 48B(10).
Section 48H (business reorganisation plan)Ignore section 48H.
Sections 48L (powers in relation to securities) to 48O (directions in or under resolution instruments)Ignore sections 48L to 48O.
Section 48Q (continuity)Treat references to a resolution instrument as references to a property transfer instrument within section 44B(2) that makes special bail-in provision under section 48B(1).
Section 48R (execution and registration of instruments, etc.)Treat references to a resolution instrument as references to a property transfer instrument within section 44B(2) that makes special bail-in provision under section 48B(1).
Section 48S (resolution instruments: general matters)Treat references to a resolution instrument as references to a property transfer instrument within section 44B(2) that makes special bail-in provision under section 48B(1).
Sections 48T (procedure) to 48WA (bail-in option: recovery of expenses) Ignore sections 48T to 48WA.
Section 48Z (termination rights etc)

In subsection (1), in paragraph (a) of the definition of “crisis management measure”, treat the reference to the bank as including a reference to a UK branch.

In subsection (6)(a), treat the first reference to the third-country institution as including a reference to the UK branch.

Section 57 (valuation principles)In subsection (4) treat the reference to the bank as a reference to the third-country institution.
Section 60 (third party compensation)

In subsection (3)—

(a) in paragraph (a) treat the second reference to a bank as including a reference to a third-country institution;

(b) in paragraph (c) treat the reference to insolvency as including any proceedings under the law of the [F708country or territory outside the United Kingdom] in which the [F709country or territory outside the United Kingdom] institution is incorporated which are equivalent to the proceedings listed in paragraph (c).

Section 60B (principle of no less favourable treatment)

In subsection (1), treat the references to a bank as including references to a third-country institution.

In subsection (2)(a) treat the reference to the bank as a reference to the UK branch.

Ignore subsection (2)(b).

In subsection (3), treat the references to a bank as references to a third-country institution.

In subsection (4) treat the reference to insolvency as including any proceedings under the law of the [F710country or territory outside the United Kingdom] in which the third-country institution is incorporated which are equivalent to the proceedings listed in subsection (4).

Section 62A (independent valuer: sections 6E and 48X)In subsection (1A) , treat the reference to the bank as including a reference to the third-country institution.
Sections 62B (resolution administrator) to 62E (resolution administrator: money) Ignore sections 62B to 62E.
Section 63 (general continuity obligations: property transfers)

In subsection (1)(a)—

(a) treat the second reference to a bank as a reference to a third-country institution;

(b) treat the reference to “whose business” as a reference to the business of whose UK branch;

(c) ignore the references to sections 41A(2) and 44D(2).

In subsection (1)(d) treat the reference to the bank as a reference to the UK branch.

In subsection (1A) treat the reference to insolvency as including any proceedings under the law of the [F711country or territory outside the United Kingdom] in which the third-country institution is incorporated which are equivalent to proceedings listed in subsection (1A).

In subsection (4A)—

(a) treat each reference to the bank as a reference to the third-country institution;

(b) treat the reference to “whose business” as a reference to “the business of whose UK branch”.

Section 64 (special continuity obligations: property transfers) Treat the references to contracts or other arrangements, in each place where they appear, as limited to contracts or other arrangements which were entered into by the third-country institution in relation to the business of its UK branch.
Section 65 (continuity obligations: onward property transfers)

In subsection (1), ignore paragraph (a)(ii).

In subsection (3), ignore paragraph (b).

In subsection (4), ignore paragraph (c), and in paragraph (d) treat the reference to “(a) to (c)” as a reference to “(a) or (b)”.

Sections 66 (share transfers) to 68 (continuity obligations: onward share transfers)Ignore sections 66 to 68.
Section 70A (suspension of obligations)

For subsection (1), substitute—

“(1)The Bank of England may suspend obligations to make a payment, or delivery, under a contract where—

(a)one of the parties to the contract is a third-country institution,

(b)the contract was entered into by the third-country institution in relation to the business of its UK branch, and

(c)the Bank is making a property transfer instrument in relation to the business of the UK branch.”.

In subsection (3)(c) treat the reference to the bank under resolution as a reference to the third-country institution.

In subsection (5), ignore the references to share transfer instruments, resolution instruments and third-country instruments.

Section 70B (restriction of security interests)

In subsection (1)—

(a) treat the first reference to the bank as a reference to the UK branch and the second as a reference to the third-country institution;

(b) treat the reference to assets of the bank as a reference to any property or rights of the third-country institution which form part of the business of the UK branch.

In subsection (3), treat the reference to any asset of the bank under resolution as a reference to any property or rights of the third-country institution which form part of the business of the UK branch.

In subsection (4), ignore the references to share transfer instruments, resolution instruments and third-country instruments.

Section 70C (suspension of termination rights)

For subsection (2), substitute—

“(2)A contract is a “qualifying contract” for the purpose of this section if—

(a)one of the parties to the contract is a third-country institution, and the contract was entered into by the third-country institution in relation to the business of its UK branch,

(b)the Bank is making a property transfer instrument in relation to the business of the UK branch, and

(c)all the obligations under the contract to make a payment, make delivery or provide collateral continue to be performed.”.

Ignore subsection (3).

In subsection (5), ignore the references to share transfer instruments, resolution instruments and third-country instruments.

In subsection (6), ignore the words after paragraph (b).

In subsection (7)—

(a) treat the reference to the bank under resolution as a reference to the third-country institution;

(b) ignore paragraph (b).

In subsection (9)—

(a) treat the reference to the bank under resolution as a reference to the third-country institution;

(b) ignore the words “or the subsidiary undertaking”.

Section 71 (pensions)Ignore section 71.
Section 76 (international obligation notice: general)

In subsections (1) and (3) treat the reference to exercising the power to make a resolution administrator appointment instrument or a mandatory reduction instrument or a stabilisation power as a reference to making a property transfer instrument.

In subsections (1) and (4) treat the reference to a bank as a reference to a UK branch.

Ignore subsection (5).

Section 77 (international obligation notice: resolution company) In subsection (1), treat the reference to a bank's business as a reference to the business of a UK branch.
Section 78 (public funds: general)

In subsections (1) and (4) treat the reference to exercising the power to make a mandatory reduction instrument or a stabilisation power as a reference to making a property transfer instrument.

In subsections (1) and (5), treat the reference to a bank as a reference to a UK branch.

Section 78A (pre-conditions for financial assistance) Ignore section 78A.
Section 79 (public funds: resolution company) In subsection (1), treat the reference to a bank's business as a reference to the business of a UK branch.
Section 79A (private sector purchaser: report)

In subsection (1), treat the reference to a bank's business as a reference to the business of a UK branch.

In subsection (2) ignore the reference to share transfer instruments.

Section 80 (resolution company: report) In subsection (1), treat the reference to a bank's business as a reference to the business of a UK branch.
Sections 80A (transfer for bail-in purposes) and 81 (temporary public ownership)Ignore sections 80A and 81.
Section 81A (accounting information to be included in reports under section 80)

In subsection (1), ignore the references to sections 80A(2)(b) and 81.

Ignore the references to the bank.

Sections 81AA to 81CA (groups) Ignore sections 81AA to 81CA.
Section 81D (interpretation: “banking group company”)

In subsection (1)(a)—

(a) ignore the reference to a bank and EU institution,

(b) treat the reference to section 81B(9) as a reference to section 89JA(2)(c).

Sections 82 (temporary public ownership) and 83 (supplemental)Ignore sections 82 and 83.
Section 83ZA (information)

For subsection (1), substitute—

“(1)This section only applies to information and documents reasonably required in connection with the making by the Bank of England of a property transfer instrument in relation to the UK branch of a third-country institution.”.

In subsections (2) and (4) treat references to a bank or banking group company as references to a third-country institution.

In subsections (7) and (10) treat references to a bank as references to a third-country institution.

Section 83ZB (reports by skilled persons)In subsection (2) treat the references to a bank as a reference to a third-country institution.
Section 83ZC (appointment by persons to carry out general investigations)

In subsection (2)(a) treat the reference to the business of a bank as a reference to the business conducted by a UK branch.

Ignore subsections (2)(c), (3) and (4).

Section 83ZE (investigations etc. in support of foreign resolution authorities)Ignore section 83ZE.
Section 83ZL (entry of premises under warrant)In subsection (3), treat each reference to a bank as a reference to a third-country institution.
Section 83ZR (regulatory sanctions)In subsection (1)(d), where the third-country institution is an investment firm, treat the references to banks as references to investment firms.]

Textual Amendments

Chapter 7U.K.General provisions

U.K.

89K.Insolvency ProceedingsU.K.

(1)If —

(a)a stabilisation power has been exercised in respect of a relevant firm, or

(b)the conditions in section 7 are met in relation to a relevant firm,

insolvency proceedings may not be commenced in relation to that firm except by, or with the consent of, the Bank of England.

(2)For the purposes of subsection (1), the commencement of insolvency proceedings means—

(a)making an application for an administration order;

(b)presenting a petition for winding up;

(c)proposing a resolution for voluntary winding up;

(d)appointing an administrator.

(3)In this section—

(a)“relevant firm” means—

(i)a bank, building society, investment firm, financial holding company, mixed financial holding company or a mixed activity holding company, or

(ii)a financial institution which is a subsidiary undertaking of an entity within sub-paragraph (i);

(b)“building society” has the meaning given in the Building Societies Act 1986;

(c)“financial holding company” has the meaning given in Article 4.1(2) of the capital requirements regulation;

(d)“financial institution” has the meaning given in Article 4.1(26) of the capital requirements regulation;

(e)“mixed activity holding company” has the meaning given in Article 4.1(22) of the capital requirements regulation;

(f)“mixed financial holding company” has the meaning given in Article [F7124.1(21) of the capital requirements regulation.]

Textual Amendments

89L.Restrictions on disclosure of confidential informationU.K.

(1)Sections 348, 349, 352 and 353 of the Financial Services and Markets Act 2000 (disclosure of information) apply for the purposes of this Part with the following modifications.

(2)Section 348 of that Act has effect as if—

(a)in subsection (2)(b), after “Act” there were inserted “or of the Bank of England under Part 1 of the Banking Act 2009 or the Bank Recovery and Resolution (No 2) Order 2014”,

(b)in subsection (3)(a), at the end there were inserted “or the Banking Act 2009”, and

(c)in subsection (5)—

(i)after paragraph (c) there were inserted—

F713“(ca). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(cb)a resolution administrator appointed under Part 1 of the Banking Act 2009;

[F714(cc)a person appointed to make a report under section 83ZB of that Act (reports by skilled persons);”],

(ii)in paragraph (e) for “to (c)” there were substituted “ [F715to (cc)] ”, and

[F716(d)after subsection (6)(b) there were inserted—

“(c)a competent person appointed by the Bank of England under Chapter 4 of Part 1 of the Banking Act 2009].”

(3)Section 349 of that Act has effect as if, in subsection (2)(c), for “or the PRA” substitute “the PRA, the Bank of England or a resolution administrator appointed by virtue of section 62B of the Banking Act 2009”.

(4)Section 353 of that Act has effect as if in subsection (1)—

(a)in paragraph (a), after “under this Act” there were inserted “or the Banking Act 2009”, and

(b)in paragraph (b) after “to the” there were inserted “Bank of England, the”.

Textual Amendments

F715Words in s. 89L(2)(c)(ii) substituted (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 25(a)(ii)

F716S. 89L(2)(d): s. 89L(2)(c)(iii) renumbered as s. 89L(2)(d) (16.12.2016) by The Bank Recovery and Resolution Order 2016 (S.I. 2016/1239), arts. 1(2), 25(b)

89M.Giving of notices, documents etc under Part 1U.K.

Regulations under section 414 of the Financial Services and Markets Act 2000 (service of notices), and subsection (4) of that section, apply in relation to any notice, direction or document of any kind required to be given under any provision of this Part (however that requirement is expressed) as if those provisions were provisions of that Act.]

Yn ôl i’r brig

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