Transfer of property
Section 33: Property transfer instrument
89.Property transfer instruments may be made by the Bank of England to effect a transfer to a private sector purchaser or to a bridge bank (sections 11 and 12). This section describes the provision that a property transfer instrument may make. The instrument may transfer some or all of the property, rights or liabilities of a specified bank. The instrument may relate to specified combinations of the specified bank’s property, rights or liabilities, although this is subject to restrictions which may be imposed by the exercise of order making powers under section 47.
Section 34: Effect
90.A transfer of property, rights or liabilities is effected through a property transfer instrument (section 33). Subsections (3) and (4) make provision for the transfer to take effect regardless of any legislative or contractual restriction, including requirements for consent (or any other restrictions which might render property not transferable).
91.Subsections (5) and (6) provide that a transfer may be made conditional on events occurring or not occurring, and may provide for the consequences should such a condition be breached. Subsection (7) makes provision about trusts.
Section 35: Transferable property
92.This section makes provision for a property transfer instrument to transfer any property, rights or liabilities. Such property, rights and liabilities are expressed to include those acquired or arising between the making of the instrument and the transfer date, and any rights and liabilities arising on or after the transfer date in respect of matters occurring before that date. Paragraphs (c) and (d) of subsection (1) provide that foreign property may be transferred. Paragraph (e) provides that rights and liabilities under enactments may be the subject of a transfer.
Section 36: Continuity
93.This section states that, when a property transfer instrument is made, provision can be made to ensure the continuity of arrangements operating in respect of a bank.
94.Subsection (1) enables the property transfer instrument to include provision that the transferee can be treated as the same person as the transferor for any purpose connected with the transfer and for the transfer to be treated as a succession.
95.Subsection (2) enables the property transfer instrument to include provision that agreements made or other things done by or in relation to a transferor are treated as made or done by or in relation to the transferee. This provision would enable, for example, the transferred deposit taker to continue to benefit from arrangements entered into by the transferor, notwithstanding any rights triggered on the transfer.
96.Subsection (3) allows for transitional provision about things relating to things transferred to be continued. This can include continuation of legal proceedings by or in relation to the transferee.
97.Subsection (4) allows for provision to be included in a property transfer instrument about continuity of employment.
98.Subsection (5) allows for the modification of references to the transferor in instruments or documents.
99.Subsection (6) provides that in so far as rights and liabilities in respect of anything transferred are enforceable after a transfer date, a property transfer instrument can apportion them as between the transferor and the transferee.
100.Subsection (7) provides that the transferor and the transferee may, by agreement, modify a provision of the instrument. However such a modification must achieve a result that could have been achieved by the instrument, and may not transfer (or arrange the transfer of) property rights or liabilities.
101.Subsection (8) allows for provision of information and assistance to be required or permitted between the transferor and the transferee under a property transfer instrument.
Section 37: Licences
102.This section makes provision in relation to licences.
103.Subsection (1) provides that a licence in respect of property transferred by property instrument shall continue to have effect notwithstanding the transfer. Subsection (2) provides that the Bank of England may disapply subsection (1), so that a licence may be discontinued. Subsection (3) specifies that where a licence imposed rights or obligations, a property transfer instrument may apportion responsibility for exercise or compliances between the transferor and transferee.
Section 38: Termination rights, &c.
104.This section makes similar provision in relation to default event provisions for property transfers as that made for share transfers by section 22.
Section 39: Foreign property
105.This section describes how a property transfer instrument may make provision for the transfer of property situated outside the United Kingdom and rights and liabilities governed by foreign law.
106.Subsection (3) states that both the transferor and the transferee must take any necessary steps to ensure that the transfer is effective as a matter of foreign law.
107.Subsection (4) makes provision for the period before a transfer may be fully effective as a matter of foreign law. For this period, the transferor must act on behalf of the transferee by holding any property or right for its benefit and discharging any liability on its behalf. Expenses incurred by the transferor in relation to these acts must be met by the transferee.
108.Subsections (6) and (7) relate to obligations imposed by the operation of this section. Such obligations are enforceable as contracts and the Bank of England may give directions in relation to those obligations, with which the transferor must comply.
Section 40: Incidental provision
109.This section provides for a property transfer instrument to include incidental, consequential or transitional provision. Such provision may be made generally or for a specified purpose or purposes.
Section 41: Procedure
110.This section requires the Bank of England to send a copy of a property transfer instrument, as soon as reasonably practicable, to the specified bank, the Treasury, the FSA and any other persons specified in the code of practice. The Bank of England must also publish the property transfer instrument in line with the provisions of subsection (2). The Treasury is also required to lay a copy of the transfer instrument before Parliament.
Section 42: Supplemental instruments
111.Where the Bank of England has made a property transfer instrument it may make additional supplemental property transfer instruments. These may provide for two things: first, for property, rights and liabilities to be transferred from the original transferor; and, second, for anything that a property transfer instrument may otherwise provide for.
112.Subsection (4) provides that the general and specific conditions (sections 7 and 8, respectively) do not apply to supplemental transfers.
113.Subsection (5) provides that the Bank of England must consult the FSA and the Treasury before making the instrument.
Section 43: Onward transfer
114.Where the Bank of England has made a property transfer instrument to effect the bridge bank stabilisation option, it may make onward property transfer instruments. These may provide for two things: first, for the property, rights or liabilities of the bridge bank to be transferred; and, second, for anything that a property transfer instrument may otherwise provide for. Subsection (5) provides that the Bank of England may not transfer property, rights or liabilities to the transferor under the original instrument.
115.Under subsection (6), the general and specific conditions (sections 7 and 8) do not apply to onward transfers. Subsection (7) requires the Bank of England to consult the Treasury and the FSA before making the instrument.
116.Subsection (8) states that the Bank may make a supplemental property transfer instrument (as provided for in section 42) following the making of an onward property transfer instrument.
Section 44: Reverse property transfer
117.Where the Bank of England has made a property transfer instrument to effect the bridge bank stabilisation option, it may make reverse property transfer instruments.
118.A reverse property transfer instrument may transfer property, rights or liabilities of a bridge bank back to the original transferor (i.e. the failing bank). Alternatively, where there has been an onward transfer to a particular type of onward transferee, the instrument may transfer property back from that onward transferee to the bridge bank. The reverse property transfer powers could only be used in this case, however, where the onward transferee was a company wholly owned by the Bank of England, a company wholly owned by the Treasury or a nominee of the Treasury. This limitation is to prevent the reverse property transfer powers from being exercisable following an onward transfer to a private sector party who wished to acquire the business of a bridge bank.
119.The general and specific conditions (sections 7 and 8, respectively) do not apply to reverse transfers. Subsection (6) provides that the Bank of England must consult the Treasury and the FSA before making the instrument.
120.Subsection (7) states that the Bank of England may make a supplemental property transfer instrument (as described in section 42) following the making of a reverse property transfer instrument.
Section 45: Temporary public ownership: property transfer
121.Where the Treasury have made a share transfer order to bring a bank into temporary public ownership, it may make property transfer orders. These may provide for two things: first, for the transfer of the property, rights or liabilities of the bank in temporary public ownership; and, second, for anything that a property transfer instrument may otherwise provide for. Subsection (4) provides that the general and specific conditions (sections 7, 8 and 9) do not apply to property transfers from temporary public ownership. The Treasury must consult the Bank of England and the FSA before making the order.
122.Subsection (6) provides that a property transfer order should be treated, in procedural terms, as a share transfer order (see section 16). In all other respects, however, it should be treated as a property transfer instrument (see section 33).
123.Subsection (8) states that the Treasury may make a supplemental property transfer order (as described in section 42) following the making of temporary public ownership property transfer order.
Section 46: Temporary public ownership: reverse property transfer
124.Where the Treasury have made a property transfer to a company wholly owned by the Bank of England or the Treasury, or a nominee of the Treasury, the Treasury may make reverse property transfer orders.
125.A reverse property transfer order provides for the transfer of property back from such an onward transferee.
126.The general and specific conditions (sections 7, 8 and 9, respectively) do not apply to onward transfers and subsection (7) provides that the Treasury must consult the Bank of England and the FSA before making the order.
Section 47: Restriction of partial transfers
127.This power enables restrictions to be placed on the making of partial transfers through the property transfer powers. A partial transfer is the transfer of some, but not all, of a bank’s property, rights or liabilities (as defined in subsection (1)).
128.Subsection (2) provides that Treasury may, by order, impose restrictions on partial transfers in the ways which are set out in subsection (2), as supplemented by subsections (3) and (4). This enables restrictions to be imposed by reference to the nature of the property, rights and liabilities which may or may not form part of the transfer. It also permits conditions to be imposed before a partial transfer can be undertaken, and can require partial transfers to include particular provisions.
129.The power is exercisable by the Treasury making an order by statutory instrument subject to the affirmative procedure (subsection (5)), or in the first instance the 28 day procedure, as provided by section 259.
Section 48: Power to protect certain interests
130.This power enables certain private law rights to be protected when the property transfer powers are exercised to effect a partial transfer. A partial transfer is the transfer of some, but not all, of a bank’s property, rights or liabilities (as defined in subsection (1) of Section 47).
131.Subsection (1) broadly defines the certain interests (“protected interests”) for which the power may provide protection. This provision reflects the extremely broad range of relevant interests which exist in this field. The interests which the exercise of the power is intended to cover may include, for example, security interests and set-off and netting arrangements.
132.Under the power, such interests may be protected in the ways set out in subsection (2), as supplemented by subsection (3).
133.The power is exercisable by the Treasury making an order by statutory instrument subject to the affirmative procedure (subsection (6)), or in the first instance the 28 day procedure, as provided by section 259.
