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Banking Act 2009, Chapter 3 is up to date with all changes known to be in force on or before 27 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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[F1Chapter 3 U.K. Special resolution action]

Textual Amendments

F1Pt. 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,

[F2(b)the PRA,

(ba)the FCA, and]

(c)the Bank of England.

[F3(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 [F4, recognised CSDs within the meaning of section 285 of the Financial Services and Markets Act 2000] and central counterparties [F5authorised 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) [F6as it forms part of [F7assimilated] 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.

[F8(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

F2S. 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.

F3S. 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

I1S. 4 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

5Code of practiceU.K.

[F9(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 [F10tests 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[F11, 12ZA] and 13 require the inclusion in the code of certain matters about bridge banks[F12, 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,

[F13(b)the PRA,

(ba)the FCA, and]

(c)the Bank of England.

Textual Amendments

F13S. 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

I2S. 5 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I3S. 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.

F14(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F15(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

[F16(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

F16S. 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

I4S. 6 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I5S. 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

[F17Mandatory write-down, conversion etc of capital instrumentsU.K.

Textual Amendments

F17Ss. 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)[F18the 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 F19... 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[F20or 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—

  • F21...

  • [F22“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

F19Words 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 [F23and 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; F24...

(c)the principal amount of Tier 2 instruments [F25of 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; [F26and

(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 [F27, Tier 2 instruments or relevant internal liabilities] of the bank, Common Equity Tier 1 instruments of the bank,

(c)provision converting relevant capital instruments [F28or 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

[F29(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 [F30or 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 [F31or the relevant internal liability] remains under, or in connection with, so much of the amount of the instrument [F32or relevant internal liability] as constitutes the reduction, except for—

(i)any liability already accrued in a case where the principal amount of the instrument [F32or 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 [F33or 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 [F34or relevant internal liabilities] in accordance with subsection (4).

(3)In order to effect a conversion of relevant capital instruments [F35or 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 [F35or relevant internal liabilities].

(4)The relevant capital instruments [F36or relevant internal liabilities] may only be so converted if—

(a)the Common Equity Tier 1 instruments are issued by the bank, or by a [F37UK parent] undertaking of the bank with the agreement of the [F38Bank 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 [F39Treasury],

(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 [F40or relevant internal liability] [F41represents appropriate compensation to the affected creditor for any loss incurred in consequence of the conversion of that instrument or liability.]

[F42(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,

  • F43...

  • “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.]

[F44Valuation before mandatory write-down of capital or stabilisation actionU.K.

Textual Amendments

F44S. 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.

[F45(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 [F46assimilated] 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.

[F47(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 [F48assimilated] 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.

[F49(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 [F50is less than the amount of its liabilities,]

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

(d)[F51paragraph (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 [F52the 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

F49S. 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

F50Words 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)

F51Words 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

I6S. 7 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F537A.Effect on other group members, financial stability in [F54UK] etcU.K.

(1)Where the Bank of England is considering the imposition of a requirement under section 3A(2), [F55(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 [F56United Kingdom], and

(c)the financial stability of the [F57United Kingdom].

[F58(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 [F59United Kingdom], and

(c)the potential effect of the exercise of the power on the financial stability of [F60countries other than the United Kingdom] (particularly those F61... 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

[F628Specific 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

[F638ZA.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.

F64(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Textual Amendments

F658ASpecific 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 [F66or 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—

[F67(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

F67S. 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

I7S. 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,

[F68(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

F68S. 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

I8S. 10 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I9S. 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

I10S. 11 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F6911APrivate 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 F70... 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.

[F71(8)The reference in subsection (7) to Regulation (EU) No 596/2014 is to that Regulation as it [F72forms part of [F73assimilated] 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 [F74meets the requirements of subsection (1A)] (a “bridge bank”).

[F75(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.

[F76(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 [F77meets 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—

[F78(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

F75S. 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)

F78S. 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

I11S. 12 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I12S. 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

[F7912ZA.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

[F8012ABail-in optionU.K.

(1)The [F81fourth] stabilisation option is exercised by the use of the power in subsection (2).

[F82(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 [F83resolution 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 [F84resolution 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 [F84resolution 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

F82Ss. 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)

F83Words in s. 12A(4)(a) substituted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 20(4)

[F8512AA.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 [F86bail-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—

  • F87...

  • “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 [F88bail-in] liabilities of the same rank by reducing the principal amount of, or outstanding amount payable in respect of, those [F88bail-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 [F89bail-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

F9012BBail-in administratorsU.K.

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

Textual Amendments

13Temporary public ownershipU.K.

(1)The [F91fifth] 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

I13S. 13 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I14S. 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 [F92Title 1 of Part 2 of [F93the capital requirements regulation].]

Textual Amendments

Commencement Information

I15S. 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

I16S. 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

I17S. 16 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I18S. 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[F94, by a mandatory reduction instrument] [F95or 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[F96, a mandatory reduction instrument] [F97or 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[F98, a mandatory reduction instrument] [F99or a resolution instrument] may extinguish rights to acquire securities falling within Class 1 or 2 in section 14.

Textual Amendments

Commencement Information

I19S. 17 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I20S. 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.

[F100(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.]

[F101(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

I21S. 18 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I22S. 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 [F102or suspended].

[F103(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

I23S. 19 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I24S. 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 [F104and senior managers] U.K.

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

(a)to remove a director [F105or senior manager] of a specified bank;

(b)to vary the service contract of a director [F105or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F105or senior manager] of a specified bank;

(d)to appoint a director [F105or senior manager] of a specified bank.

[F106(1A)Subsection (1) also applies to a director [F107or 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 [F108or senior manager] of a specified bank;

(b)to vary the service contract of a director [F108or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F108or senior manager] of a specified bank;

(d)to appoint a director [F108or 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.

[F109(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

I25S. 20 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I26S. 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

I27S. 21 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I28S. 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

F11022Termination 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

I29S. 23 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I30S. 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,

[F111(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, F112...

(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[F113, 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

F111S. 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.

F112Word 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

I31S. 24 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I32S. 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,

[F114(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, F115...

(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[F116, 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

F114S. 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.

F115Word 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

I33S. 25 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I34S. 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) [F117or 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—

[F118(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) [F119or 12(2)] (and not in reliance on subsection (2) above).

Textual Amendments

F118S. 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

I35S. 26 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F12026ZAOnward 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

[F12226A F121... reverse share transfer [F123instruments] 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”) [F124or 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 F125... reverse share transfer instruments in respect of securities issued by the bank and held by the original transferee.

[F126(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 F125... reverse share transfer instrument is a share transfer instrument which—

(a)provides for transfer to the transferor under the original instrument [F127(where subsection (2) applies)];

[F128(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) [F129or (ab)].

(4)The Bank of England must not make a F125... reverse share transfer instrument [F130under subsection (2)] without the written consent of the original transferee.

[F131(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 F125... 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 F125... 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 F125... reverse share transfer instrument.]

Textual Amendments

F121Words 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)

F125Words 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—

[F132(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

F132S. 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

I36S. 27 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I37S. 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—

[F133(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

F133S. 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

I38S. 28 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I39S. 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 [F134orders] 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 [F135securities 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).

[F136(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—

[F137(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

F135Words 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.

F137S. 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

I40S. 29 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I41S. 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

[F13829A.Interpretation: “resolution company”U.K.

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

Textual Amendments

30 [F139Resolution company:] share transfersU.K.

[F140(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 [F141resolution company] share transfer instruments.

(3)A [F141resolution company] share transfer instrument is a share transfer instrument which—

(a)provides for securities issued by the [F141resolution company] to be transferred;

(b)makes other provision for the purposes of, or in connection with, the transfer of securities issued by the [F141resolution 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 [F141resolution 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 [F141resolution company] share transfer instrument the Bank of England must consult—

[F142(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(6)Section 26 applies where the Bank of England has made a [F141resolution company] share transfer instrument.

Textual Amendments

F139Words 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)

F142S. 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

I42S. 30 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

31 [F143Resolution company:] reverse share transferU.K.

(1)This section applies where the Bank of England has made a [F144resolution company] share transfer instrument in accordance with section 30(2) (“the original instrument”) F145...

(2)The Bank of England may make one or more [F144resolution company] reverse share transfer instruments in respect of securities issued by the [F144resolution company] and held by a [F146transferee under the original instrument].

(3)A [F144resolution 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).

[F147(3A)The Bank of England must not make a [F144resolution 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 [F144resolution 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 [F144resolution 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 [F144resolution company] reverse share transfer instrument the Bank of England must consult—

[F148(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(6)Section 26 applies where the Bank of England has made a [F144resolution company] reverse share transfer instrument.

Textual Amendments

F143Words 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)

F145Words 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.

F146Words 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.

F148S. 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

I43S. 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

I44S. 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.

[F149(3)In this section references to a bank include a resolution company (whether or not it is a bank).]

Textual Amendments

Commencement Information

I45S. 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 F150..., 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.

[F151(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

F150Words 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

I46S. 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 [F152(including under legislation of the European Union)], and

(e)rights and liabilities under an enactment F153....

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

Textual Amendments

Commencement Information

I47S. 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

I48S. 36 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F15436ADirectors [F155and senior managers] U.K.

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

(a)to remove a director [F156or senior manager] of a specified bank;

(b)to vary the service contract of a director [F156or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F156or senior manager] of a specified bank;

(d)to appoint a director [F156or senior manager] of a specified bank.

(2)Subsection (1) also applies to a director [F157or 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.

[F158(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

I49S. 37 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

F15938Termination 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.

[F160(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.]

[F161(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

I50S. 39 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F16239ABanks which are [F163recognised central counterparties]U.K.

[F164Paragraphs 59, 60 and 108 of Schedule 11 to the Financial Services and Markets Act 2023] ([F163recognised central counterparty] rules, membership and recognition) apply in relation to a bank which would be a [F165recognised central counterparty] but for [F166paragraph 155(2) of Schedule 11 to that Act] (exclusion of banks etc from definition of [F165recognised central counterparty]) as they apply in relation to a [F165recognised central counterparty].]

Textual Amendments

[F16739B.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

I51S. 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,

[F168(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, F169...

(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[F170, 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.

[F171(4)In this section references to a “bank” include a resolution company even if it is not a bank.]

Textual Amendments

F168S. 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.

F169Word 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

I52S. 41 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I53S. 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

[F17241ATransfer 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)[F173Section 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 [F17412(2)[F175, 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[F176, 8 and [F1778ZA]] 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—

[F178(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)[F179, 12(2)[F180, 12ZA(3)] or 41A(2)] (and not in reliance on subsection (2) above).

Textual Amendments

F178S. 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

I54S. 42 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F18142APrivate 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 [F182resolution company] in accordance with section 12(2) [F183or 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 [F184resolution 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 [F184resolution 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 [F185resolution 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[F186, 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—

[F187(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

F187S. 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

I55S. 43 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

44 [F188[F189Resolution 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) [F190or 12ZA(3)] (“the original instrument”) providing for the transfer of property, rights or liabilities to a [F191resolution company].

(2)The Bank of England may make one or more [F191resolution company] reverse property transfer instruments in respect of property, rights or liabilities of the [F191resolution company].

(3)If the Bank of England makes an onward property transfer instrument under section 43 the Bank may make one or more [F191resolution company] reverse property transfer instruments in respect of property, rights or liabilities [F192of a transferee under the onward property transfer instrument (“the onward transferee”).]

(4)[F193A [F191resolution 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 [F191resolution 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).

[F194(4A)The Bank of England must not make a [F191resolution 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)[F195the [F191resolution company] reverse] property transfer instrument is made with the written consent of the onward transferee.]

(5)Sections 7, 8[F196, 8ZA] and 52 do not apply to [F197a [F191resolution 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 [F198a [F191resolution company] reverse] property transfer instrument the Bank of England must consult—

[F199(a)the PRA,

(aa)the FCA, and]

(b)the Treasury.

(7)Section 42 applies where the Bank of England has made [F200a [F191resolution company] reverse] property transfer instrument.

Textual Amendments

F189Words 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)

F192Words 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.

F199S. 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

I56S. 44 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F20144ABail 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)[F202Section 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.

[F203(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 [F204or 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 [F20512(1A) and 12ZA(2)]) as being wholly owned by the Bank of England, as long as the Bank of England [F206is entitled to exercise, or control the exercise of, voting rights in respect of] all the ordinary shares issued by B.

Textual Amendments

F203S. 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)

[F20744BAProperty 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

[F20844DBridge 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).

[F209(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—

[F210(a)the PRA,

(aa)the FCA, and]

(b)the Bank of England.

Textual Amendments

F210S. 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

I57S. 45 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I58S. 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”) F211....

(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.

[F212(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).

[F213(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—

[F214(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

F211Words 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.

F214S. 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

I59S. 46 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I60S. 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.

[F215(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).

[F216(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

I61S. 47 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I62S. 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

I63S. 48 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I64S. 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

[F21748ACreation 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), [F21842A(3)(b),] 43(3)(b), 44(4)(c)[F219, 44A(3)(b)], [F22044D(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

F218Words 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.

[F221Bail-in optionU.K.

Textual Amendments

F221Ss. 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, F222...

(c)creating a new security (of any form or class) in connection with the modification of such an instrument[F223, 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.

[F224(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 [F225are 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 [F226with 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;

[F227(ea)liabilities with a remaining maturity of less than 7 days owed by the bank to a recognised central counterparty F228... or a third country central counterparty;]

F229(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)liabilities owed to an employee or former employee in relation to salary or other remuneration, except [F230—

(i)variable remuneration that is not regulated by a collective bargaining agreement, and

(ii)variable remuneration of material risk takers [F231within 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)];]

[F232(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.

[F233(j)liabilities owed by the bank to the scheme manager of the [F234FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) of the Financial Services and Markets Act 2000];]

[F235(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 [F236is 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.

[F237(10)The Bank of England may, in a resolution instrument, exclude any [F238bail-in] liability or class of [F238bail-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), F239...

F239(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11)The power conferred by subsection (10) may be exercised to exclude only part of [F240a bail-in liability], or part of each of [F241the bail-in liabilities] of a particular class; and where it is so exercised that part is treated as [F240a bail-in liability] excluded under that subsection and the remainder is treated as an [F240a 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 [F242micro, 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 [F243the 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.

[F244(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)—

  • [F245“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

  • [F246“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.]]

[F247(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

F222Word 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)

C1S. 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.

[F248(1)A deposit is “protected” so far as it is covered by [F249the FSCS].]

(4)In [F250subsection (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

F248S. 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 [F251Article 2.5(2), (3) or [F252(24)]] of Directive 2013/36/EU of the European Parliament and of the Council;

  • [F253“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);]

  • F254...

  • “employee” includes the holder of an office;

  • F255...

  • F256...

  • “pension scheme” includes any arrangement for the payment of pensions, allowances and gratuities;

  • [F257“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;

  • [F258“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.

[F259(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.]

F260(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 [F261resolution administrator], or one or more directors of the bank, to—

(a)draw up a business reorganisation plan with respect to the bank, F262...

(b)submit it to the Bank of England within the period allowed by (or under) the instrument [F263; 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.

[F264(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

F26548IBail-in administrator: further functionsU.K.

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

Textual Amendments

F26548JBail-in administrator: supplementaryU.K.

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

Textual Amendments

F26548KBail-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 [F266or suspended].

[F267(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 [F268(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.

[F269(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 [F270resolution 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.

[F271(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.]

[F272(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

F27348MTermination rights, etcU.K.

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

Textual Amendments

48NDirectors [F274and senior managers] U.K.

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

(a)to remove a director [F275or senior manager] of a specified bank;

(b)to vary the service contract of a director [F275or senior manager] of a specified bank;

(c)to terminate the service contract of a director [F275or senior manager] of a specified bank;

(d)to appoint a director [F275or senior manager] of a specified bank.

(2)Subsection (1) also applies to a director [F276or 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.

[F277(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.

[F278(5)See also section 83ZR for further provision about enforcement of a direction under this section.]

Textual Amendments

Modifications etc. (not altering text)

C2S. 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)

C3S. 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)

C4S. 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)

C5S. 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, F279...

(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[F280, 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

F279Word 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)

C6S. 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)[F281Section 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)[F282Section 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 [F283resolution 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)[F284Section 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

[F28548WABail-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

[F286Replacement of provisional valuationU.K.

Textual Amendments

F286Ss. 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).]

[F287Termination rights etcU.K.

Textual Amendments

F287S. 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” F288... means—

    (a)

    the imposition by the PRA or the FCA [F289under 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 [F290section 3A,]

    (c)

    [F291the 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 [F292, 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);

  • [F293“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;]

  • [F294“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;]

  • [F294“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;]

  • [F294“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;]

  • [F295“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)[F296Subject 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.

[F297(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 [F298four] methods of protecting the financial interests of transferors and others in connection with share transfer instruments and orders[F298, 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.

[F299(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

I65S. 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

I66S. 50 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I67S. 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

I68S. 51 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I69S. 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 [F300resolution company] U.K.

[F301(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 [F302persons 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

F300Words 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

I70S. 52 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I71S. 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

[F30352ABail-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 [F304etc] U.K.

(1)This section applies where—

[F305(zza)the Bank of England makes a supplemental share transfer instrument under section 26,]

[F306(zzb)the Bank of England makes an onward share transfer instrument under section 26ZA,]

[F307(za)the Bank of England makes a F308... reverse share transfer instrument under section 26A,]

[F309(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 [F310resolution company] share transfer instrument under section 30,

(d)the Bank of England makes a [F311resolution company] reverse share transfer instrument under section 31,

[F312(dza)the Bank of England makes a supplemental property transfer instrument under section 42,]

[F313(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,

[F314(fa)the Bank of England makes a reverse property transfer instrument under section 44A(2),]

[F315(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, F316...

(h)the Treasury make a reverse property transfer order under section 46.

[F317(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

F308Words 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)

F310Words 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

F311Words 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

I72S. 53 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I73S. 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[F318: compensation scheme order or bail-in compensation order] U.K.

(1)A compensation scheme order [F319or 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 [F320or 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

I74S. 54 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I75S. 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.

[F321(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

I76S. 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,

[F322(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[F323, 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.

[F324(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

F322S. 56(1)(ca) inserted (8.4.2010) by Financial Services Act 2010 (c. 28), ss. 21(4)(a), 26(1)(f)

Commencement Information

I77S. 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 [F325or 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 [F326Part 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

F326Words 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

I78S. 57 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I79S. 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 [F327resolution 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

I80S. 58 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I81S. 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

I82S. 59 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I83S. 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 [F328shareholders 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 [F329shareholder or] creditor” means a person who—

(i)[F330holds 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

I84S. 60 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I85S. 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

[F33160AFurther 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

F331Ss. 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 [F33211(2), 12(2) or 12ZA(2)], to the first instrument to be made under [F333those 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

F331Ss. 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, F334...

[F335(ca)bail-in compensation orders,]

(d)regulations under section 60[F336, and]

[F336(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, [F337subject 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

F337Words 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

I86S. 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, F338...

[F339(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

I87S. 62 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I88S. 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

[F340Independent valuer: valuation under section 6E or 48XU.K.

Textual Amendments

F340S. 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.

[F341(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 F342..., or

(b)if no such regulatory technical standards [F343exist], satisfies the independence requirement set out in section 1151 of the Companies Act 2006.

[F344(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 [F345assimilated] 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)[F346Section] 55(1) to (5) and (7) to (10) F347... 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

F347Words 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)

[F348Resolution administratorU.K.

Textual Amendments

F348Ss. 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)[F349, 12(2) [F350, 12ZA(3)] [F351, 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 [F352resolution company] to whom all or part of the transferred business has been transferred.

[F353(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.

[F354(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.

[F355(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

F351Words 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

I89S. 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 [F356a 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 [F357a 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 [F358a 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.

[F359(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.]

[F360(7)For the purposes of subsection (2), “third party” includes a group company.]

Textual Amendments

F359S. 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

I90S. 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) [F361or 12ZA(3)] (an “original transferee”), or

(ii)a bank, securities issued by which were earlier transferred by [F362a 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

I91S. 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)[F363, 12(2)(a)] or 13(2)[F364, 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)[F365, 12(2)(a)][F366, or in a case falling within subsection (1A)], and

(ii)the Treasury, where ownership was transferred in accordance with section 13(2).

[F367(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.]

[F368(1A)A bank falls within this subsection if a [F369mandatory 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.

[F370(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.

[F371(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

I92S. 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 [F372a third party];

(b)modify the terms of a contract or other arrangement between the transferred bank and [F373a 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.

[F374(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

F374S. 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

I93S. 67 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I94S. 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 [F375a share transfer instrument under section 12(2),] [F376a 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

I95S. 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

I96S. 69 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I97S. 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

I98S. 70 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F37770A.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 F378...

  • “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 F379....

Textual Amendments

Modifications etc. (not altering text)

C7Ss. 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)

C8S. 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

C9Ss. 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)

C7Ss. 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)

C9Ss. 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;

F380....

(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)

C7Ss. 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)

C9Ss. 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)

    F381...

    (c)

    a recognised central counterparty F382... or third country central counterparty, or

    (d)

    a central bank.

(2)For the purposes of subsection (1) F383..., “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—

[F384(za)mandatory reduction instruments,]

(a)share transfer orders,

(b)share transfer instruments, F385...

(c)property transfer instruments[F386, and]

[F386(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

I99S. 71 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I100S. 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

F38772EnforcementU.K.

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

Textual Amendments

73DisputesU.K.

(1)This section applies to—

[F388(za)mandatory reduction instruments,]

(a)share transfer orders,

(b)share transfer instruments, F389...

(c)property transfer instruments[F390, F391...

(d)resolution instruments][F392, 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

F391Word 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)

F392S. 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

I101S. 73 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I102S. 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 [F393the 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 [F394the 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 [F395the 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.

[F396(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[F397, 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

I103S. 74 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I104S. 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), F398...

[F399(ca)to investment firms,]

F400(cb). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F401(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).

[F402(9)For the purposes of this section—

  • [F403“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

F398Word 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

I105S. 75 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I106S. 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 [F404the 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 [F405the 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.

[F406(5)“Resolution administrator appointment instrument” means an instrument under section 62B(2)(a).]

Textual Amendments

Commencement Information

I107S. 76 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

77International obligation notice: [F407resolution company] U.K.

(1)This section applies where the Bank of England has transferred all or part of a bank's business to a [F408resolution 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 [F408resolution company], or

(b)not to take specified action under this Part in respect of the [F408resolution 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

F407Words 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

I108S. 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 [F409the 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 [F410the 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

I109S. 78 in force at 17.2.2009 for specified purposes by S.I. 2009/296, arts. 2, 3, Sch. para. 1

I110S. 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

[F41178A.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 [F412bail-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: [F413resolution company] U.K.

(1)This section applies where the Bank of England has transferred all or part of a bank's business to a [F414resolution company].

(2)The Bank of England may not take action in respect of the [F414resolution 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

F413Words 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

I111S. 79 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F41579APrivate 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[F416Resolution company:] reportU.K.

(1)Where the Bank of England transfers all or part of a bank's business to a [F417resolution company], the Bank must report to the Chancellor of the Exchequer about the activities of the [F417resolution 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 [F417resolution 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 [F417resolution company].

(6)A request under subsection (5) may include provision about—

(a)the content of the report;

(b)timing.

Textual Amendments

F416Words 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

I112S. 80 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F41880ATransfer 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

I113S. 81 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1

[F41981AAccounting information to be included in reports under sections 80[F420, 80A(2)(b) and 81] U.K.

(1)A report under section 80(1)[F421, 80A(2)(b) or 81] must include accounting information in respect of the bank or [F422resolution 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 [F422resolution 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 [F422resolution 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

[F423Groups]U.K.

Textual Amendments

F423S. 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

[F42481AA.Cases where mandatory write-down, conversion etc applies: banking group companiesU.K.

(1)Section 6B (mandatory write-down, conversion, etc. of capital instruments [F425and relevant internal liabilities]) applies in relation to a banking group company in the cases set out in subsections (2), (4) [F426, (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 [F427Article 4.1A of the capital requirements regulation]) (“the parent institution”), but

(ii)is not an entity within [F428subsection (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).

[F429(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)F430... 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) F431... 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.

F432(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 [F433or 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 F434... that, in order for a bank F435... which is a member of the same group as the banking group company to fulfil its own funds requirements, relevant capital instruments [F436or relevant internal liabilities] of the banking group company need to be written down or converted into Common Equity Tier 1 instruments (or both).

[F437(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 F438... 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—

F439(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F439(ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii)if [F440the 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—

  • F441...

  • F441...

  • F441...

  • F441...

  • “financial institution” has the [F442same meaning as in the capital requirements regulation];

  • [F443“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” [F444means 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

F434Words 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

[F44581BSale 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.

[F446(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

F447(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 F448... 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 [F449public 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.

[F450(9)In this section—

  • F451...

  • F451...

  • “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 [F452section 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

F445Ss. 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

F446S. 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)

C10S. 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)

[F45381ZZBA.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 [F454subsection (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

F445Ss. 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 [F455the 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 [F456including any [F457assimilated] 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 [F458was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures or any [F459assimilated] 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

F445Ss. 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

[F46081ZBA.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

F461(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 F462... 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);

  • F463...

    and the definitions in section 81B(9) apply.]

Textual Amendments

F445Ss. 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)

C11S. 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)

[F46481ZBB.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 [F465subsection (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); F466...

  • F467...

Textual Amendments

F445Ss. 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 [F468the 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 [F469including any [F470assimilated] 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 [F471was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures or any [F472assimilated] 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

F445Ss. 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

[F47381BABail-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.

[F474(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

F475(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 F476... 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 [F477public 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.

[F478(7)The definitions in section 81B(9) apply for the purposes of this section.]]

Textual Amendments

F445Ss. 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

F474S. 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)

C12S. 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)

[F47981BB.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 [F480subsection (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

F445Ss. 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 [F481the 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 [F482including any [F483assimilated] 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 [F484was relied on by the United Kingdom immediately before IP completion day to implement the capital requirements directive and its implementing measures or any [F485assimilated] 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

F445Ss. 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[F486Sections 81AA to 81ZBB: supplemental]U.K.

(1)In the following provisions references to banks include references to banking group companies—

(a)section 10(1), F487...

[F488(aa)section 48Z, and]

(b)section 75(5)(a).

[F489(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,

[F490(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.

[F491(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 [F492, 81ZZBA, 81ZBA or 81ZBB], the provisions relating to the stabilisation powers and the bank administration procedure contained in this Act (except sections 7 [F493, 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

F445Ss. 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

F487Word 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)

[F49481CASection 81BA [F495and Section 81BB]: supplementalU.K.

(1)This section applies where the Bank of England has power under section 81BA [F496or 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 [F497section 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 F498[F499... 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” [F500included 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” [F501included 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

F445Ss. 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

F500Words 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 F502[F503... or third-country institution (within the meaning of section [F50481AA(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 [F50581AA 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 [F506sections 81B to 81CA] and this section as in that Act.]

Textual Amendments

F445Ss. 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 [F507the 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—

[F508(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

F508S. 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

I114S. 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),

[F509(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), [F510and]

[F511(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 regimeF512...), 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

F510Word 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.

F511S. 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.

F512Words 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

I115S. 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

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