Section 98: Property transfer instruments: property held on trust
558.Section 33 of the Banking Act 2009 describes a property transfer instrument as an instrument which, in short, may provide for the property, rights or liabilities of a specified bank to be transferred; may make other provision for the purposes, or in connection with, the transfer; and may relate to some or all of the property, rights and liabilities of the failing bank.
559.A property transfer instrument may be made by the Bank for the purposes of effecting a transfer to a private sector purchaser or to a bridge bank (sections 11 and 12 respectively) and may also be made to make, for example, additional transfers from the failed bank (section 42), reverse transfers from the bridge bank to the failed bank (section 44) and onward transfers from a bridge bank to another person (section 43). For completeness, the Treasury may make property transfer orders to transfer property, rights and liabilities from a bank in temporary public ownership (section 45) and reverse transfers (see for example section 46).
560.Sections 34 and 36 to 40 of the Banking Act 2009 make provision for some of the matters which may be provided for in a property transfer instrument (or property transfer order as the case may be). Section 34(7) specifies that a property transfer instrument (or order) may make provision about property held on trust. Concerns have been raised by the Banking Liaison Panel (the Panel established under section 10 of the Banking Act 2009 to advise the Treasury about the effect to the special resolution regime on banks, building societies and the financial markets) that this subsection suggests that provision could be made in a transfer instrument or order to modify or terminate the terms of such trust arrangements for reasons other than to effect a transfer and irrespective of the consequences for the beneficiaries of the trust. Therefore section 98(2) and (3) makes minor amendments to this provision to clarify that the terms on which trust property is held may only be modified or altered to the extent necessary or expedient, in the opinion of the Bank, to transfer the legal or beneficial interest in that property and any powers, rights or obligations in respect of that property. Section 98(4) and (5) provide for the same restrictions to apply in the case of property transfer orders made by the Treasury.
