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Banking Act 2009

Type Public General Act

Publication 2009-02-12

Last updated 2026-01-19

State In force

Department Statute Law Database

Source legislation.gov.uk

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Part 1 — Special Resolution Regime

Introduction

Application of Part 1: general

1

(1) The purpose of the special resolution regime for banks is to address the situation where all or part of the business of a bank has encountered, or is likely to encounter, financial difficulties.

(2) The special resolution regime consists of—

(a) the five stabilisation options,

(b) the bank insolvency procedure (provided by Part 2), and

(3) The five “stabilisation options” are—

(a) transfer to a private sector purchaser (section 11),

(b) transfer to a bridge bank (section 12),

(ba) transfer to an asset management vehicle (section 12ZA),

(d) transfer to temporary public ownership (section 13).

(4) Each of the five stabilisation options is achieved through the exercise of one or more of the “stabilisation powers”, which are—

(za) the resolution instrument powers (sections 12A(2) and 48U to 48W),

(a) the share transfer powers (sections 15, 16, 26 to 31 and 85), and

(b) the property transfer powers (sections 33, 41A and 42 to 46).

(5) Each of the following has a role in the operation of the special resolution regime—

(a) the Bank of England,

(b) the Treasury,

(d) the Financial Conduct Authority.

(6) The Table describes the provisions of this Part.

Sections	Topic
Sections 1 to 3	Introduction
Sections 3A and 3B	Pre-resolution powers
Sections 4 to 6	Objectives and code
Sections 6A to 6D	Mandatory write-down, conversion etc of capital instruments
Section 6E	Valuation before mandatory write-down or stabilisation action
Sections 7 to 10	Exercise of powers: general
Sections 11 to 13	The stabilisation options
Sections 14 to 32	Transfer of securities
Sections 33 to 48A	Transfer of property
Sections 48B to 48WA	Bail-in option
Sections 48X and 48Y	Replacement of provisional valuation
Section 48Z	Termination rights etc
Sections 49 to 62	Compensation
Section 62A	Independent valuer
Sections 62B to 62E	Resolution administrator
Sections 63 to 75	Incidental functions
Sections 76 to 81A	Treasury
Sections 81B to 83	Groups
Sections 83ZA to 83Z2	Information and enforcement
Section 83A	Banks not regulated by the PRA
Sections 84 to 89	Building societies, &c.
Section 89A	Investment firms
. . .	. . .
Sections 89H to 89J	Third-country resolution actions
Section 89JA	Resolution of UK branches of third-country institutions

Investing in National Loans Fund

2

(1) In this Part “bank” means a UK institution which has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity of accepting deposits (within the meaning of section 22 of that Act, taken with Schedule 2 and any order under section 22).

(2) But “bank” does not include—

(a) a building society (within the meaning of section 119 of the Building Societies Act 1986),

(b) a credit union within the meaning of section 31 of the Credit Unions Act 1979 or a credit union within the meaning of Article 2(2) of the Credit Unions (Northern Ireland) Order 1985, or

(3) In subsection (1) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom.

(4) Where a stabilisation power is exercised in respect of a bank, it does not cease to be a bank for the purposes of this Part if it later loses the permission referred to in subsection (1).

(5) An order under subsection (2)(c)—

(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.

(6) Section 84 applies this Part to building societies with modifications.

(7) Section 89 allows the application of this Part to credit unions.

(8) Section 89A applies this Part to investment firms with modifications.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) Section 89JA applies this Part to UK branches of third-country institutions with modifications.

Interpretation: other expressions

3

(1) In this Part—

“Additional Tier 1 instruments” means capital instruments that meet the conditions laid down in Article 52(1) of the capital requirements regulation (or which qualify as Additional Tier 1 instruments by virtue of Chapter 2 or 4 of Title I of Part Ten of that regulation),

“bail-in liabilities”, of an undertaking, means liabilities and capital instruments that—do not qualify as Common Equity Tier 1 instruments, Additional Tier 1 instruments or Tier 2 instruments, of the undertaking, andare not excluded liabilities listed in section 48B(8),

“the capital requirements regulation” means 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, as it forms part of assimilated law,

“CRR rules” has the meaning given in section 144A of the Financial Services and Markets Act 2000,

“client assets” means assets which an institution has undertaken to hold for a client (whether or not on trust, and whether or not the undertaking has been complied with),

“Common Equity Tier 1 instruments” means capital instruments that meet the conditions laid down in Article 28(1) to (4), or 29(1) to (5) ... of the capital requirements regulation (or which qualify as Common Equity Tier 1 instruments by virtue of Chapter 2 of Title I of Part Ten of that regulation),

“critical functions”, subject to subsections (2) and (2A), means activities, services or operations (wherever carried out) the discontinuance of which is likely ...—to lead to the disruption of services that are essential to the economy of the United Kingdom, orto disrupt financial stability in the United Kingdom,due to the size, market share, external and internal connectedness, complexity or cross-border activities of a bank or a group which includes a bank (with particular regard to the substitutability of those activities, services or operations),;

“FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);

“normal insolvency proceedings” means the collective insolvency proceedings which—entail the partial or total divestment of a debtor and the appointment of a liquidator or administrator (or a similar officeholder),are normally applicable to institutions under the law of any part of the United Kingdom, andare either specific to those institutions or generally applicable to any natural or legal person;and, in particular, includes the bank insolvency procedure and the bank administration procedure;

“eligible liabilities” has the meaning given by section 3A(4A),

“extraordinary public financial support” means financial assistance that is provided by the Treasury or the Bank of England in order to preserve or restore the viability, liquidity or solvency of a bank, a banking group company or a group which includes a bank, other than—ordinary market assistance offered by the Bank of England on its usual terms, ...a liquidity facility which is provided—to a bank that is facing temporary liquidity problems but is solvent, andby the Bank of England on its own initiative and on its own terms, , orany amount in respect of which the Bank of England may require a recapitalisation payment under section 214E of the Financial Services and Markets Act 2000,and for the purposes of this definition “group” (other than in “banking group company”) has the meaning given in subsection (2)(b);

“the PRA” means the Prudential Regulation Authority,

“the FCA” means the Financial Conduct Authority, and

“financial assistance” has the meaning given by section 257.

“own funds” means own funds as defined in Article 4.1(118) of the capital requirements regulation (read with Title I of Part Ten of that regulation),

“own funds requirements” means the requirements laid down in Articles 92 and 93 of the capital requirements regulation and Article 94 of Chapter 3 of the Trading Book (CRR) Part of the PRA Rulebook (read with Title I of Part Ten of that regulation),

“the recovery and resolution directive” means Directive 2014/59/EU of the European Parliament and of the Council of 15th May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms as last amended by Directive (EU) 2019/879 of the European Parliament and of the Council of 20th May 2019,

“relevant capital instruments” means Additional Tier 1 instruments and Tier 2 instruments,

“relevant internal liabilities” of a bank or banking group company means eligible liabilities held by a resolution entity in the same resolution group as the bank or banking group company, either directly or indirectly (through other entities in the same resolution group that bought the liabilities from the bank or banking group company),

“resolution entity” means an entity which is identified by the Bank of England in a resolution plan or a group resolution plan under Part 5 of the Bank Recovery and Resolution (No.2) Order 2014 as an entity in respect of which—the Bank of England might exercise a stabilisation power, or ...a relevant third-country authority might take third-country resolution action,and for the purposes of this definition, ... “relevant third-country authority” has the meaning given by section 81AA(14) ... and “third-country resolution action” has the meaning given by section 89H(7),

“resolution group” means a resolution entity together with any subsidiary that—is not a resolution entity itself,is not a subsidiary of another resolution entity, andwhere the subsidiary is established in a country or territory other than the United Kingdom, is stated by the group resolution plan under Part 5 of the Bank Recovery and Resolution (No.2) Order 2014 to be included in the resolution group,and for the purpose of this definition “subsidiary” has the meaning given by Article 4.1(16) of the capital requirements regulation,

“Tier 2 instruments” means capital instruments or subordinated loans that meet the conditions laid down in Article 63 of the capital requirements regulation (or which qualify as Tier 2 instruments by virtue of Chapter 2 or 4 of Title I of Part Ten of that regulation),

(2) For the purposes of the definition of “critical functions” in subsection (1)—

(a) Article 6 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of critical functions) applies, and

(b) “group” means a parent undertaking within the meaning given by Article 4.1(15)(a) of the capital requirements regulation and its subsidiaries within the meaning given by Article 4.1(16) of that regulation.

(2A) The Treasury may by regulations made by statutory instrument specify criteria for the determination of the activities, services and operations referred to in the definition of “critical functions”.

(2B) The power conferred by subsection (2A) includes—

(a) power to amend or revoke Article 6 of Commission Delegated Regulation (EU) 2016/778; and

(b) power to amend or repeal subsection (2)(a).

(2C) A statutory instrument containing regulations under subsection (2A) is subject to annulment in pursuance of a resolution of either House of Parliament.

(3) In this Part references to a director include, in relation to an undertaking which has no board of directors, a member of the equivalent management body responsible for the management of the undertaking concerned.

(4) In this Part a reference to the PRA rulebook is to the rulebook published by the PRA containing rules made by the PRA under the Financial Services and Markets Act 2000 as the rulebook has effect on 1 January 2022.

Objectives and code

Special resolution objectives

4

(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

(3) For the purpose of this section the relevant authorities are—

(a) the Treasury,

(b) the PRA,

(ba) the FCA, and

(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 , recognised CSDs within the meaning of section 285 of the Financial Services and Markets Act 2000 and central counterparties authorised 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) as it forms part of assimilated 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.

(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.

Code of practice

5

(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,

(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 tests for the use of the stabilisation powers in sections 8 and 8ZA are satisfied,

(g) sections 63 and 66, and

(h) compensation.

(2A) The code must include guidance on the contents of a report, and of any interim report, under section 214F of the Financial Services and Markets Act 2000 (recapitalisation payment: report).

(3) Sections 12, 12ZA and 13 require the inclusion in the code of certain matters about bridge banks, 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,

(b) the PRA,

(ba) the FCA, and

Code of practice: procedure

6

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

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

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

(4) Before re-issuing the code of practice the Treasury must consult—

(a) the PRA,

(b) the FCA,

(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.

Exercise of powers: general

General conditions

7

(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 is less than the amount of its liabilities,

(d) paragraph (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 the 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

(5H) Before determining that Conditions 3 and 4 are met, the Bank must consult—

(a) the PRA,

(b) the FCA, and

(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.

Specific conditions: private sector purchaser and bridge bank

8

(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.

Specific conditions: temporary public ownership

9

(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 or 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—

(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.

Banking Liaison Panel

10

(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

(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

(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,

(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.

The stabilisation options

Private sector purchaser

11

(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.

Bridge bank

12

(1) The second stabilisation option is to transfer all or part of the business of the bank to a company which meets the requirements of subsection (1A) (a “bridge bank”).

(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,

(d) different arrangements for management and control at different stages, and

(e) eventual disposal.

(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

(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 meets 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—

(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).

Temporary public ownership

13

(1) The fifth 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.

Transfer of securities

Interpretation: “securities”

14

(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,

(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 Title 1 of Part 2 of the capital requirements regulation.

15

(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).

(1A) Where the Bank of England requires a recapitalisation payment to be made under section 214E of the Financial Services and Markets Act 2000 in respect of a specified bank, a share transfer instrument may include provision requiring the specified bank to issue securities.

(2) A share transfer instrument may relate to—

(a) specified securities, or

(b) securities of a specified description.

16

(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.

Effect

17

(1) In this section “transfer” means a transfer provided for by a share transfer instrument or order, by a mandatory reduction instrument or 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, a mandatory reduction instrument or 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, a mandatory reduction instrument or a resolution instrument may extinguish rights to acquire securities falling within Class 1 or 2 in section 14.

Continuity

18

(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.

(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.

(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.

Conversion and delisting

19

(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 or suspended.

(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.

Directors

20

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

(a) to remove a director or senior manager of a specified bank;

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

(d) to appoint a director or senior manager of a specified bank.

(1A) Subsection (1) also applies to a director or 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 or senior manager of a specified bank;

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

(d) to appoint a director or 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.

(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.

Ancillary instruments: production, registration, &c.

21

(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.

Termination rights, &c.

22

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

Incidental provision

23

(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.

Procedure: instruments

24

(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,

(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, ...

(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, 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.

Procedure: orders

25

(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,

(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, ...

(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, 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.

Supplemental instruments

26

(1) This section applies where the Bank of England has made a share transfer instrument in accordance with section 11(2) or 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—

(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) or 12(2) (and not in reliance on subsection (2) above).

Supplemental orders

27

(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—

(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).

Onward transfer

28

(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—

(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.

29

(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 securities 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).

(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—

(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.

30

(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 resolution company share transfer instruments.

(3) A resolution company share transfer instrument is a share transfer instrument which—

(a) provides for securities issued by the resolution company to be transferred;

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

(a) the PRA,

(aa) the FCA, and

(b) the Treasury.

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

31

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

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

(3) A resolution 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).

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

(a) the PRA,

(aa) the FCA, and

(b) the Treasury.

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

Interpretation: general

32

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.

Transfer of property

Property transfer instrument

33

(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,

(d) property, rights or liabilities of a specified description.

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

Effect

34

(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);

(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 ..., 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.

(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.

Transferable property

35

(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,

(d) rights and liabilities under the law of a country or territory outside the United Kingdom (including under legislation of the European Union), and

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

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

Continuity

36

(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).

Licences

37

(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.

Termination rights, &c.

38

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

Foreign property

39

(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.

(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.

(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.

Incidental provision

40

(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.

Procedure

41

(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,

(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, ...

(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, 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.

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

Supplemental instruments

42

(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 11(2) or 12(2), 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, 8 and 8ZA 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—

(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), 12(2), 12ZA(3) or 41A(2) (and not in reliance on subsection (2) above).

Onward transfer

43

(1) This section applies where the Bank of England has made a property transfer instrument in respect of a resolution company in accordance with section 12(2) or 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 resolution 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 resolution 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 resolution 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, 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—

(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.

Reverse property transfer

44

(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 12(2) or 12ZA(3) (“the original instrument”) providing for the transfer of property, rights or liabilities to a resolution company.

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

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

(4) A resolution 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 resolution 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).

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

(5) Sections 7, 8, 8ZA and 52 do not apply to a resolution 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 a resolution company reverse property transfer instrument the Bank of England must consult—

(a) the PRA,

(aa) the FCA, and

(b) the Treasury.

(7) Section 42 applies where the Bank of England has made a resolution company reverse property transfer instrument.

Temporary public ownership: property transfer

45

(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).

(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—

(a) the PRA,

(aa) the FCA, and

(b) the Bank of England.

Temporary public ownership: reverse property transfer

46

(1) This section applies where the Treasury have made a property transfer order in accordance with section 45(2) (“the original order”) ....

(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.

(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).

(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—

(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.

Restriction of partial transfers

47

(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.

(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;

(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) 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.

Power to protect certain interests

48

(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;

(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.

Compensation

Orders

49

(1) This Part provides four methods of protecting the financial interests of transferors and others in connection with share transfer instruments and orders, 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.

(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.

Sale to private sector purchaser

50

(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.

Transfer to temporary public ownership

51

(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.

Transfer to bridge bank

52

(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 persons 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.

Onward and reverse transfers

53

(1) This section applies where—

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

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

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

(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,

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

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

(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,

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

(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, ...

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

(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.

Independent valuer

54

(1) A compensation scheme order or 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 or 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).

Independent valuer: supplemental

55

(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.

(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.

Independent valuer: money

56

(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,

(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, 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;

(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.

(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.

Valuation principles

57

(1) A compensation scheme order or 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;

(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).

(3A) In subsection (3), “financial assistance” includes any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E of the Financial Services and Markets Act 2000.

(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 Part 4A of the Financial Services and Markets Act 2000 (regulated activities) varied or cancelled,

(b) is unable to continue as a going concern,

(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.

Resolution fund

58

(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

(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;

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Banking Act 2009

Part 1 — Special Resolution Regime

Introduction

Application of Part 1: general

1

Investing in National Loans Fund

2

Interpretation: other expressions

3

Objectives and code

Special resolution objectives

4

Code of practice

5

Code of practice: procedure

6

Exercise of powers: general

General conditions

7

Specific conditions: private sector purchaser and bridge bank

8

Specific conditions: temporary public ownership

9

Banking Liaison Panel

10

The stabilisation options

Private sector purchaser

11

Bridge bank

12

Temporary public ownership

13

Transfer of securities

Interpretation: “securities”

14

Share transfer instrument

15

Share transfer order

16

Effect

17

Continuity

18

Conversion and delisting

19

Directors

20

Ancillary instruments: production, registration, &c.

21

Termination rights, &c.

22

Incidental provision

23

Procedure: instruments

24

Procedure: orders

25

Supplemental instruments

26

Supplemental orders

27

Onward transfer

28

Reverse share transfer

29

Bridge bank: share transfers

30

Bridge bank: reverse share transfer

31

Interpretation: general

32

Transfer of property

Property transfer instrument

33

Effect

34

Transferable property

35

Continuity

36