The stabilisation options
Section 11: Private sector purchaser
42.Where both the general conditions of section 7 and the specific conditions for the private sector purchaser stabilisation option of section 8 are met, subsection (1) allows the Bank of England to sell all or part of the business of a bank to a commercial purchaser.
43.Subsection (2) provides that this transfer may be effected through either a transfer of the bank’s shares and other securities, or some or all of its property, rights and liabilities. Both types of transfer are executed by instruments made by the Bank (a share transfer instrument (see section 15) or a property transfer instrument (see section 33)).
Section 12: Bridge bank
44.Subsection (1) provides that, where the general conditions (section 7) and the specific conditions (section 8) for the bridge bank stabilisation option are met, the Bank of England may transfer all or part of the business of a bank to a bridge bank. Subsection (2) provides that a transfer to a bridge bank may be effected only through a transfer of the some or all of the bank’s property, rights and liabilities and is executed by one or more instrument(s) made by the Bank. As defined in subsection (1), a bridge bank is a company wholly owned by the Bank of England.
45.The code of practice to be made under section 5(1) must address matters relating to the management and control of bridge banks, which must address certain matters specified in subsection (3).
46.Under subsection (4), where a property transfer is made from a bridge bank (whether or not through means of a property transfer instrument) to a company wholly owned by the Bank of England, that company shall be treated as an ‘onward bridge bank’. Subsection (5) provides for the nature of an onward bridge bank (by setting out the provisions of Part 1 which do and do not apply to onward bridge banks).
Section 13: Temporary public ownership
47.Where the general conditions (section 7) are satisfied and the Treasury is satisfied that the specific conditions for the temporary public ownership stabilisation option are met as provided in section 9, the Treasury may take a bank into temporary public ownership.
48.Subsection (2) provides that the transferee may either be a nominee of the Treasury (such as the Treasury Solicitor) or a company wholly owned by the Treasury. A transfer to temporary public ownership may only be effected through a transfer of securities, and is made by a share transfer order made by statutory instrument subject to the negative procedure (see sections 16 and 25).
49.Subsection (3) provides that the code of practice must include provision about the management of a bank in temporary public ownership.