Legalize / United Kingdom / Public General Act

Banking (Special Provisions) Act 2008

Type Public General Act

Publication 2008-02-21

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Introduction

Meaning of “authorised UK deposit-taker”

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(1) In this Act “authorised UK deposit-taker” means a UK undertaking that under Part 4 of FSMA 2000 has permission to accept deposits.

(2) That expression does not, however, include such an undertaking with permission to accept deposits only for the purposes of, or in the course of, an activity other than accepting deposits.

Cases where Treasury’s powers are exercisable

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(1) The power of the Treasury to make an order under—

(a) section 3 (transfer of securities issued by an authorised UK deposit-taker), or

(b) section 6 (transfer of property, rights and liabilities of an authorised UK deposit-taker),

is exercisable in relation to an authorised UK deposit-taker if (and only if) it appears to the Treasury to be desirable to make the order for either or both of the following purposes.

This is subject to subsection (7).

(2) The purposes are—

(a) maintaining the stability of the UK financial system in circumstances where the Treasury consider that there would be a serious threat to its stability if the order were not made;

(b) protecting the public interest in circumstances where financial assistance has been provided by the Treasury to the deposit-taker for the purpose of maintaining the stability of the UK financial system.

(3) The reference in subsection (2)(b) to the provision of financial assistance by the Treasury to the deposit-taker includes—

(a) any case where the Bank of England has provided financial assistance to the deposit-taker and—

(i) the Treasury have assumed a liability in respect of the assistance,

(ii) the liability is of a kind of which the Treasury are expected to give relevant notice, and

(iii) the Treasury have given relevant notice of the liability;

(b) any case where the Chancellor of the Exchequer has announced that the Treasury (whether acting alone or with the Bank of England) would, if necessary, put in place relevant guarantee arrangements in relation to the deposit-taker (as well as any case where any such arrangements have been put in place, whether or not following such an announcement).

(4) For the purposes of subsection (3) the Treasury give “relevant notice” of a liability if—

(a) they lay a Minute before the House of Commons containing information about the liability, or

(b) they give written notice containing such information to the person who chairs the House of Commons Committee of Public Accounts and the person who chairs the House of Commons Treasury Committee.

(5) It is immaterial whether the notice or announcement mentioned in subsection (3) is given or made before or after the passing of this Act.

(6) In this Act “relevant guarantee arrangements”, in relation to any authorised UK deposit-taker, means any guarantee arrangements for protecting some or all of the depositors or other creditors of the deposit-taker.

(7) Where an order has been made under section 3 or 6 in relation to any authorised UK deposit-taker, subsection (1) does not apply in relation to any subsequent exercise of the power to make an order under either of those sections in relation to that deposit-taker.

(8) The power of the Treasury to make an order under section 3 or 6 in relation to an authorised UK deposit-taker may not be exercised after the end of the period of one year beginning with the day on which this Act is passed.

(9) Subsection (8) does not affect the continuation in force or effect of any order made or other thing done by virtue of either of those sections before the end of that period.

(10) In this section “the UK financial system” means the financial system in the United Kingdom.

(11) Section 13 of the National Audit Act 1983 (c. 44) (interpretation of references to Committee of Public Accounts) applies for the purposes of this section, but as if—

(a) the references in that section to that Act were to this Act, and

(b) the references in that section to the House of Commons Committee of Public Accounts included the House of Commons Treasury Committee.

Transfer of securities

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(1) The Treasury may, in relation to all or any securities of a specified description that have been issued by an authorised UK deposit-taker, by order make provision for or in connection with, or in consequence of, the transfer of the securities to any of the following—

(a) the Bank of England;

(b) a nominee of the Treasury;

(d) any body corporate not within paragraph (c).

(2) Schedule 1 specifies particular kinds of provisions that may be included in an order under this section.

(3) Where an order providing for the transfer of any securities has been made under this section, the power to make an order under this section may be subsequently exercised so as to make provision in connection with, or in consequence of, the transfer (including provision of a kind specified in Schedule 1) even though the order does not itself provide for the transfer of any securities.

(4) Where an order under this section or section 6 (“the initial order”) has been made in relation to an authorised UK deposit-taker, the power to make an order under this section may be subsequently exercised in relation to that deposit-taker whether or not any transfer of securities provided for by the order is to the person to whom any transfer was made by or under the initial order.

(5) For the purposes of this section any provision made by an order under this section in relation to any transaction or event taking place while securities transferred by such an order are held by a person within subsection (1)(a), (b) or (c) is to be regarded as provision made in consequence of the transfer.

Extinguishment of subscription rights

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(1) This section applies where the Treasury make, or have made, an order under section 3 providing for the transfer of securities issued by an authorised UK deposit-taker.

(2) The Treasury may by order make provision for or in connection with, or in consequence of, the extinguishment of rights of any specified description to subscribe for, or otherwise acquire, securities of—

(a) the deposit-taker, or

(b) any of its subsidiary undertakings.

(3) Subsection (2) applies whether the rights have been granted by the deposit-taker or otherwise.

(4) Where an order providing for the extinguishment of any rights has been made under this section, the power to make an order under this section may be subsequently exercised so as to make provision in connection with, or in consequence of, the extinguishment of those rights even though the order does not itself provide for any rights to be extinguished.

Compensation etc. for securities transferred etc.

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(1) The Treasury must by order—

(a) in relation to an order under section 3 that transfers securities only to the public sector, make a scheme for determining the amount of any compensation payable by the Treasury to persons who held the securities immediately before they were so transferred;

(b) in relation to an order under section 3 that transfers securities only to a private sector body, make provision for determining the amount of any consideration payable by the body to persons who held the securities immediately before they were so transferred;

(c) in relation to an order under section 3 that transfers securities both to the public sector and a private sector body, make provision for determining—

(i) the amount of any compensation payable by the Treasury, and

(ii) the amount of any consideration payable by the private sector body concerned,

to persons who held the securities immediately before they were so transferred.

(2) The Treasury must by order make provision for determining the amount of any compensation payable to persons whose rights are extinguished by virtue of an order under section 4 (a “section 4 order”) and—

(a) in any case where the section 4 order is made in consequence of an order under section 3 that transfers securities only to the public sector, the order must provide for any compensation to be payable by the Treasury;

(b) in any case where the section 4 order is made in consequence of an order under section 3 that transfers securities only to a private sector body, the order must provide for any compensation to be payable by the private sector body concerned;

(c) in any case where the section 4 order is made in consequence of an order under section 3 that transfers securities both to the public sector and a private sector body, the order must make provision for determining the amount of any compensation payable by the Treasury or the private sector body concerned (or both).

(3) An order under this section may also make provision for extending provisions of the order, in any specified circumstances, to persons otherwise affected by any provision made in an order under section 3 or 4.

(4) In determining the amount of any compensation payable by the Treasury by virtue of any provision in an order under this section, it must be assumed—

(a) that all financial assistance provided by the Bank of England or the Treasury to the deposit-taker in question has been withdrawn (whether by the making of a demand for repayment or otherwise), and

(b) that no financial assistance would in future be provided by the Bank of England or the Treasury to the deposit-taker in question (apart from ordinary market assistance offered by the Bank of England subject to its usual terms).

(5) For the purposes of subsection (4)—

(a) the references to the provision of financial assistance by the Treasury to the deposit-taker include any case where the Chancellor of the Exchequer announces that the Treasury (whether acting alone or with the Bank of England) would, if necessary, put in place relevant guarantee arrangements in relation to the deposit-taker (as well as any case where any such arrangements are put in place, whether or not following such an announcement);

(b) “ordinary market assistance” means assistance provided as part of the Bank's standing facilities in the sterling money markets or as part of the Bank's open market operations in those markets.

(6) It is immaterial whether the announcement mentioned in subsection (5)(a) is made before or after the passing of this Act.

(7) In this section—

(a) any reference to any transfer of securities to the public sector is a reference to the transfer of any securities to any person within paragraphs (a) to (c) of subsection (1) of section 3;

(b) any reference to any transfer of securities to a private sector body is a reference to the transfer of any securities to any body corporate within paragraph (d) of that subsection.

(8) An order under subsection (1) or (2) must be made within the period of 3 months beginning with—

(a) the day on which the order under section 3 is made (in the case of an order under subsection (1)), or

(b) the day on which the order under section 4 is made (in the case of an order under subsection (2)).

(9) But nothing in subsection (8) prevents the making, at any time after the end of that period, of a second or subsequent order under this section in relation to the order under section 3 or 4.

Transfer of property etc.

Transfer of property, rights and liabilities

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(1) The Treasury may by order make provision for or in connection with, or in consequence of, the transfer of property, rights and liabilities of an authorised UK deposit-taker to either (or each) of the following—

(a) a company wholly owned by the Bank of England or the Treasury;

(b) a body corporate not within paragraph (a).

(2) An order under this section may define the property, rights and liabilities to be transferred in one or more of the following ways—

(a) by specifying or describing the property, rights and liabilities in question;

(b) by referring to all the property, rights and liabilities comprised in the whole or a specified part of the deposit-taker's business;

(3) Schedule 2 specifies particular kinds of provisions that may be included in an order under this section.

(4) Where an order providing for the transfer of any property, rights or liabilities has been made under this section, the power to make an order under this section may be subsequently exercised so as to make provision in connection with, or in consequence of, the transfer (including provision of a kind specified in Schedule 2) even though the order does not itself provide for the transfer of any property, rights or liabilities.

(5) Where an order under this section or section 3 (“the initial order”) has been made in relation to an authorised UK deposit-taker, the power to make an order under this section may be subsequently exercised in relation to that deposit-taker whether or not any transfer of property, rights or liabilities provided for by the order is to the person to whom any transfer was made by or under the initial order.

(6) A second or subsequent order made under this section in relation to an authorised UK deposit-taker may make provision for any of the property, rights or liabilities transferred by or under a previous order under this section to be transferred back to the deposit-taker.

(7) The provisions of this section and Schedule 2 apply for the purposes of subsection (6) with any necessary modifications.

(8) For the purposes of this section any provision made by an order under this section in relation to any transaction or event taking place while property, rights or liabilities transferred by or under such an order are held by a company within subsection (1)(a) is to be regarded as provision made in consequence of the transfer.

Compensation etc. for property etc. transferred

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(1) The Treasury must by order make provision—

(a) in relation to an order under section 6 providing for the transfer of property, rights or liabilities to a company within subsection (1)(a) of that section, for determining the amount of any compensation payable by the Treasury to the authorised UK deposit-taker concerned;

(b) in relation to an order under section 6 providing for the transfer of property, rights or liabilities to any other body, for determining the amount of any consideration payable by the transferee to the authorised UK deposit-taker concerned.

(2) An order under this section may also make provision for extending provisions of the order, in any specified circumstances, to persons otherwise affected by any provision made in an order under section 6.

(3) In determining the amount of any compensation payable by the Treasury by virtue of any provision in an order under this section, it must be assumed—

(a) that all financial assistance provided by the Bank of England or the Treasury to the deposit-taker in question has been withdrawn (whether by the making of a demand for repayment or otherwise), and

(b) that no financial assistance would in future be provided by the Bank of England or the Treasury to the deposit-taker in question (apart from ordinary market assistance offered by the Bank of England subject to its usual terms).

(4) For the purposes of subsection (3)—

(a) the references to the provision of financial assistance by the Treasury to the deposit-taker include any case where the Chancellor of the Exchequer announces that the Treasury (whether acting alone or with the Bank of England) would, if necessary, put in place relevant guarantee arrangements in relation to the deposit-taker (as well as any case where any such arrangements are put in place, whether or not following such an announcement);

(b) “ordinary market assistance” means assistance provided as part of the Bank's standing facilities in the sterling money markets or as part of the Bank's open market operations in those markets.

(5) It is immaterial whether the announcement mentioned in subsection (4)(a) is made before or after the passing of this Act.

(6) An order under this section must be made within the period of 3 months beginning with the day on which the order under section 6 is made.

(7) But nothing in subsection (6) prevents the making, at any time after the end of that period, of a second or subsequent order under this section in relation to the order under section 6.

Further transfers

Further transfers following transfer to public sector

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(1) Subsection (2) applies where any securities issued by an authorised UK deposit-taker have been transferred to a person within section 3(1)(a) to (c) by an order under section 3.

(2) In such a case the Treasury may by order make provision for or in connection with, or in consequence of, the transfer to a specified person of any of the following—

(a) any of the securities transferred as mentioned in subsection (1);

(b) any securities issued by the deposit-taker at any time after the transfer mentioned in that subsection;

(d) any of the property, rights and liabilities of any UK undertaking which is a subsidiary undertaking of the deposit-taker;

(e) where the securities so transferred were transferred to a company within section 3(1)(c)—

(i) any securities issued by the company;

(ii) any property, rights and liabilities of the company.

(3) Subsection (4) applies where any property, rights or liabilities have been transferred to a company within section 6(1)(a) (“the company”) by or under an order under section 6.

(4) In such a case the Treasury may by order make provision for or in connection with, or in consequence of, the transfer to a specified person of any of the following—

(a) any property, rights and liabilities of the company;

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