Legalize / United Kingdom / Public General Act

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

articles Not indexed

Reform history JSON API

(f) “mixed financial holding company” has the meaning given in Article 4.1(21) of the capital requirements regulation.

89L

(1) Sections 348, 349, 352 and 353 of the Financial Services and Markets Act 2000 (disclosure of information) apply for the purposes of this Part with the following modifications.

(2) Section 348 of that Act has effect as if—

(a) in subsection (2)(b), after “Act” there were inserted “or of the Bank of England under Part 1 of the Banking Act 2009 or the Bank Recovery and Resolution (No 2) Order 2014”,

(b) in subsection (3)(a), at the end there were inserted “or the Banking Act 2009”, and

(i) after paragraph (c) there were inserted—

(ca) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (cb) a resolution administrator appointed under Part 1 of the Banking Act 2009; (cc) a person appointed to make a report under section 83ZB of that Act (reports by skilled persons);

(ii) in paragraph (e) for “to (c)” there were substituted “ to (cc) ”, and

(d) after subsection (6)(b) there were inserted—

(c) a competent person appointed by the Bank of England under Chapter 4 of Part 1 of the Banking Act 2009.

(3) Section 349 of that Act has effect as if, in subsection (2)(c), for “or the PRA” substitute “the PRA, the Bank of England or a resolution administrator appointed by virtue of section 62B of the Banking Act 2009”.

(4) Section 353 of that Act has effect as if in subsection (1)—

(a) in paragraph (a), after “under this Act” there were inserted “or the Banking Act 2009”, and

(b) in paragraph (b) after “to the” there were inserted “Bank of England, the”.

89M

Regulations under section 414 of the Financial Services and Markets Act 2000 (service of notices), and subsection (4) of that section, apply in relation to any notice, direction or document of any kind required to be given under any provision of this Part (however that requirement is expressed) as if those provisions were provisions of that Act.

120A

(1) Section 120 shall apply to relevant firms as it applies to banks, except that for this purpose—

(a) subsections (5) and (10) of that section have effect as if any reference to the PRA were a reference to the appropriate regulator, and

(b) subsection (7) has effect as if for paragraph (b) there were substituted—

(b) the Bank of England has informed the person who gave the notice that it does not intend to exercise a stabilisation power under Part 1 in relation to the firm (and Condition 5 has been met, if applicable).

(2) In this section—

(a) “relevant firm” means—

(i) a financial holding company, investment firm, mixed financial holding company or a mixed activity holding company, or

(ii) a financial institution which is a subsidiary undertaking of a bank or an entity within paragraph (a)(i);

(b) “financial holding company” has the meaning given in Article 4.1(2) of the capital requirements regulation (within the meaning of section 3);

(c) “financial institution” has the meaning given in Article 4.1(26) of the capital requirements regulation (within the meaning of section 3);

(d) “mixed activity holding company” has the meaning given in Article 4.1(22) of the capital requirements regulation (within the meaning of section 3);

(e) “mixed financial holding company” has the meaning given in Article 4.1(21) of the capital requirements regulation (within the meaning of section 3).

(3) In this section, references to “the appropriate regulator” are—

(a) to the PRA, in relation to a PRA-authorised person; and

(b) to the FCA in relation to any other authorised person.

Interpretation: other expressions

152A

(1) This section applies where the Bank of England—

(a) makes a resolution instrument that transfers securities issued by a bank (or a bank's parent undertaking), in accordance with section 12A(2), and

(b) later makes a property transfer instrument from the bank or from another bank which is or was in the same group as the bank, in accordance with section 41A(2).

(1A) This section also applies where the Bank of England—

(a) makes a share transfer instrument that transfers securities issued by a bank (or a bank's parent undertaking), in accordance with section 12(2), and

(b) later makes a property transfer instrument from the bank in accordance with section 44D.

(2) This Part applies to the transferor under the property transfer instrument made in accordance with section 41A(2) or 44D(2) as to the transferor under a property transfer instrument made in accordance with section 12(2).

(3) For that purpose this Part applies with any modifications specified by the Treasury in regulations; and any regulations—

(a) are to be made by statutory instrument, and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

Fees

Special resolution regime

Information

Regulations

Delegation of functions

Power to designate banks as “authorised banks”

Tenure

Immunity

Abolition for cheques

Regulations

...

256A

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84A

(1) This section applies for the purpose of the exercise of the fourth stabilisation option (bail-in) in relation to a building society.

(2) Subsection (2A) of section 12A (bail-in option) is to be read as if the provision referred to included provision under this section.

(3) Subsection (1) of section 12AA (bail-in: sequence of write-down and conversion of capital instruments and liabilities) is to be read as if the powers referred to included the powers conferred by this section, sections 84B and 84C and the provisions modified by section 84D.

(4) A resolution instrument with respect to a building society may make—

(a) provision of the kind mentioned in subsection (5);

(b) other provision for the purposes of, or in connection with, provision of the kind mentioned in subsection (5) made by that or another instrument.

(5) A resolution instrument may—

(a) convert the building society into a company, or

(b) transfer all the property, rights and liabilities of the building society to a company.

(6) In the following provisions of this section, “the successor company”, in relation to a building society, means the company into which the building society is converted, or to which the property, rights and liabilities of the building society are transferred, as a result of provision made under subsection (5).

(7) The provision that may be made under subsection (4)(b) includes—

(a) provision cancelling shares in the building society;

(b) provision cancelling membership rights in the building society;

(d) provision conferring rights and imposing liabilities in place of cancelled shares and membership rights;

(e) provision requiring the FCA to cancel the building society’s registration under the Building Societies Act 1986 at a time specified in or determined in accordance with the instrument;

(f) provision that any person approved for the purposes of Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) in relation to the building society immediately before the resolution instrument is made continues to be approved for those purposes in relation to the successor company (but without affecting the powers of the FCA or PRA to vary or withdraw an approval);

(g) provision which could be included in a property transfer instrument by virtue of—

(i) section 34(7) and (8) (property held on trust), or

(ii) section 36(1) to (5) (continuity).

(8) The provision that may be made under subsection (4)(b) also includes—

(a) in a case where the resolution instrument makes provision under subsection (5)(a), provision for the successor company on its incorporation to be wholly owned by a company specified in the instrument;

(b) in a case where the resolution instrument makes provision under subsection (5)(b) transferring the property, rights and liabilities of the building society to a company which is wholly owned by another company, provision relating to that other company;

(i) for the transfer of liabilities from the successor company to the other company mentioned in paragraph (a) or (b) (“the parent undertaking”), and for the creation of corresponding liabilities of the successor company to the parent undertaking;

(ii) replacing a liability (of any form) of the building society or the successor company with a liability or security (of any form or class) of the parent undertaking.

(9) A company may not be specified under subsection (8)(a) unless it is (or is to be) wholly owned by—

(a) the Bank of England,

(b) a resolution administrator appointed under section 62B(1), or

(10) Where a resolution instrument makes provision under subsection (5), section 37 (licences) applies as if the references to a property transfer instrument were references to the resolution instrument.

(11) A resolution instrument may provide for different provision made under this section by the instrument to take effect at different times.

(12) In this section—

“company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

“deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), but ignoring the exclusions in article 6.

84B

(1) This section applies where

(a) a share transfer instrument makes provision under section 84ZA(2)(a), or

(b) a resolution instrument makes provision under section 84A(5)(a)

(2) The share transfer instrument or resolution instrument must—

(a) state the company’s proposed name;

(b) set out the terms of the memorandum of association of the company;

(c) set out the terms of the articles of association of the company (to the extent that these are not to be supplied by the default application of model articles: see section 20 of the Companies Act 2006);

(d) contain the statements and information required to be included in or to accompany an application for a certificate under section 761 of the Companies Act 2006 (public company: requirement as to minimum share capital).

(3) The conversion into the successor company takes effect on the registration of the company under the Companies Act 2006.

(4) The successor company is to be treated as the same person in law as the building society.

(5) The documents required by section 9 of the Companies Act 2006 (registration documents) to be delivered to the registrar (within the meaning of that Act) include a copy of the share transfer instrument or resolution instrument.

(6) In section 13 of the Companies Act 2006 (statement of compliance) and section 14 of that Act (registration), the reference to the requirements of that Act is to be read as a reference to the requirements of that Act as modified by this section.

(7) If the share transfer instrument or resolution instrument complies with subsection (2)(d), an application for a trading certificate is to be taken to have been made in accordance with section 762 of the Companies Act 2006 (procedure for obtaining trading certificate).

(8) In this section—

“company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

“the successor company”, in relation to a building society, means the company into which the building society is converted as a result of provision made under section 84ZA(2)(a) or 84A(5)(a).

84C

(1) A transfer under section 84A(5)(b) must be to a company which immediately before the transfer is wholly owned by—

(a) the Bank of England,

(b) a resolution administrator appointed under section 62B(1),

(d) a company which is itself wholly owned by a person within paragraphs (a) to (c).

(2) Where a resolution instrument has made provision under section 84A(5)(b), the building society is dissolved at such time as may be specified in or determined in accordance with the instrument.

(3) In this section, “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares.

84D

(A1) Where a share transfer instrument makes provision under section 84ZA(2) with respect to a building society, the second stabilisation option is to be exercised by making (in that or a subsequent share transfer instrument) provision under section 12(2)(a)—

(a) with respect to the successor company, or

(b) where provision made under section 84ZA includes provision under subsection (3)(g) of that section, with respect to the successor company or its specified parent undertaking.

(1) Where a resolution instrument makes provision under section 84A(5) with respect to a building society, the exercise of the fourth stabilisation option involves the making (in that or a subsequent resolution instrument) of provision or proposals of any kind mentioned in section 12A(3) to (6)—

(a) with respect to the successor company, or

(b) where provision made under section 84A includes provision under subsection (8) of that section, with respect to the successor company or its specified parent undertaking.

(2) For the purpose of the making of provision as mentioned in subsection (A1)(a) or (b) or provision or proposals as mentioned in subsection (1)(a) or (b)—

(a) the Table in section 84 does not apply, and

(b) the provisions in the first column of the following Table apply where relevant —

(i) in relation to the successor company, or

(ii) in a case within subsection (A1)(b) or (1)(b), in relation to the successor company or its specified parent undertaking,

as they apply in relation to a bank, but subject to the modifications in the third column of the Table.

Section	Topic	Modification
Section 12A	Bail-in option	Treat references in subsection (4) to securities issued by a specified bank as references to securities issued by the building society, or by the successor company or its specified parent undertaking.For subsection (8) substitute—8Subsection (8ZA) applies where—athe Bank of England has exercised the power in subsection (4) to transfer securities to a resolution administrator; orbby virtue of section 84A, 84B or 84C securities of a successor company or a specified parent undertaking are held by—ithe resolution administrator,iithe Bank of England,iiia subscriber to the memorandum of association of a company into which the building society is converted in accordance with section 84B, oriva person nominated for the purposes of section 84C(1)(c).8ZAThe Bank of England must exercise its functions under this Part (see, in particular, section 48V) with a view to ensuring that any securities—aheld by a person in the capacity of a resolution administrator,bheld by the Bank of England,cheld by a person as a result of being a subscriber to the memorandum of association of a company into which the building society is converted in accordance with section 84B,dheld by a person as a result of being nominated by the Bank of England for the purposes of section 84C(1)(c),are so held only for so long as is, in the Bank of England’s opinion, appropriate having regard to the special resolution objectives..
Section 12AA	Bail-in: sequence of write-down and conversion of capital instruments and liabilities	In relation to the result to be achieved, treat any reference to an instrument or liability of the bank as a reference to an instrument or liability of the building society immediately before the making of the first resolution instrument under section 84A in respect of it.
Section 15	Share transfer instruments	Treat references in subsection (1) to securities issued by a specified bank as references to securities issued by the building society, or by the successor company or its specified parent undertaking.
Section 17	Effect of transfer
Section 18	Continuity
Section 19	Conversion and delisting
Section 20	Directors and senior managers	Treat references to a director or senior manager of a specified bank as references to a director or senior manager of the building society or of the successor company or its specified parent undertaking.In subsection (1A) treat the reference to a specified bank as a reference to the building society or its successor company.
Section 21	Ancillary instruments: production, registration etc
Section 21	Incidental provision
Section 24	Procedure: instruments	On the first occasion on which the power to make a share transfer instrument is exercised in relation to a building society, treat the references in this section to a bank as a reference to a building society.
Section 26	Supplemental Instruments	Treat the reference in subsection (3) to securities issued by the bank as a reference to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 26ZA	Onward share transfer instruments	Treat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 30	Resolution company: share transfers
Section 31	Resolution company: reverse share transfer
Section 41A, and any other provision so far as relating to property transfer instruments under section 41A(2)	Transfer of property subsequent to resolution instrument
Section 44D and any other provision so far as relating to property transfer instruments under section 44D	Transfer of property subsequent to share transfer instrument	Section 44D also applies where the Bank of England has made a share transfer instrument in accordance with section 12(2) which provides for the conversion of the building society under section 84ZA(2).
Section 48B	Special bail-in provision	The provision that may be made in accordance with section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes provision replacing a liability (of any form) of the building society or its successor company with a liability of the successor company’s specified parent undertaking.
Section 48C	Meaning of “protected deposit”
Section 48D	General interpretation of section 48B
Section 48E	Report on special bail-in provision
Section 48F	Power to amend definition of “excluded liabilities”
Section 48G	Priority between creditors	Treat the reference in subsection (1) to the treatment of liabilities on an insolvency as a reference to the treatment of liabilities on the insolvency of a building society.
Section 48H	Business reorganisation plans	Treat the reference in subsection (2)(a) to the bank as a reference to the building society.
Section 48L	Powers in relation to securities	Treat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 48N	Directors and senior managers	Treat references to a director or senior manager of a specified bank as references to a director or senior manager of the building society or of the successor company or its specified parent undertaking.
Section 48O	Directions in or under resolution instrument	Treat references to a director of the bank as references to a director of the building society or of the successor company or its specified parent undertaking.
Section 48P	Orders for safeguarding certain financial arrangements
Section 48Q	Continuity
Section 48R	Execution and registration of instruments etc.
Section 48S	Resolution instruments: general matters
Section 48T	Resolution instruments: procedure	On the first occasion on which the power to make a resolution instrument is exercised in relation to a building society, treat the first reference in subsection (1) to a bank as a reference to the building society.
Section 48U	Supplemental resolution instruments	Treat the reference in subsection (1) to a bank as a reference to the building society.
Section 48V	Onward transfer	Treat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 48W	Reverse transfer	Treat references to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 48X	Replacement of Bank’s provisional valuation	Treat the first reference in subsection (2)(a) to the bank as a reference to the building society.
Section 48Y	Consequences of a replacement valuation	Treat the first reference in subsection (1) to the bank as a reference to the building society.
Section 48Z	Termination rights etc.	This section applies to contracts and other agreements entered into by the building society or by the successor company or its specified parent undertaking.
Section 49	Compensation orders	Treat references to transferors as including references to the shareholding members of the building society.
Section 52	Transfer to resolution company
Section 52A	Compensation orders: bail-in option
Section 53	Onward and reverse transfers etc.
Section 54	Independent valuer: compensation scheme order or bail-in compensation order
Section 55	Independent valuer: supplemental
Section 56	Independent valuer: money
Section 57	Valuation principles	Treat the reference in subsection (4) to a bank as a reference to the building society.Treat the reference in subsection (5) to a transferor as including a reference to a shareholding member of the building society.
Section 58	Resolution fund
Section 59	Third party compensation: discretionary provision	Treat the reference in subsection (1) to a transferor as including a reference to a shareholding member of the building society.
Section 60A	Further mandatory provision: bail-in provision
Section 60B	Principle of no less favourable treatment	Treat references to pre-resolution shareholders and creditors of a bank as references to persons who were shareholding members of, or creditors of, the building society, immediately before the coming into effect of the first resolution instrument to be made in respect of the building society.Treat references to the bank as references to the building society.
Section 61	Sources of compensation
Section 62	Procedure
Section 62A	Independent valuer: sections 6E and 48X
Sections 62B to 62E	Resolution administrator
Sections 63, 64 and 66 to 70 where they apply in relation to a share transfer instrument or a resolution instrument or in relation to a property transfer instrument under section 41A(2)	Continuity obligations	Treat references in sections 66(1A) and 68(1)(a) to securities issued by the bank as references to securities issued by the building society or by the successor company or its specified parent undertaking.
Section 70A	Suspension of obligations
Section 70B	Restriction of security interests
Section 70C	Suspension of termination rights
Section 70D	Suspension: general provisions
Section 71	Pensions	This section applies in relation to a pension scheme of the building society or of the successor company.
Section 73	Disputes
Section 74	Tax	This section enables regulations to make provision in relation to the building society, the successor company or its specified parent undertaking.
Section 75	Power to change law	Treat the reference in subsection (5)(b) to building societies as including a reference to successor companies and their specified parent undertakings.
Section 78	Public funds: general
Section 78A	Pre-conditions for financial assistance: duty of Bank to give information
Section 79	Public funds: resolution company	Treat the reference in subsection (1) to a bank as a reference to a building society or its successor company.
Section 80	Resolution company: report	Treat the reference in subsection (1) to a bank as a reference to a building society or its successor company.
Section 80A	Transfer for bail-in purposes: report	Treat the reference in subsection (1) to a bank as a reference to the building society.
Section 81A	Accounting information to be included in reports under sections 80, 80A(2)(b) and 81
Sections 83ZA to 83Z2	Information, investigation and enforcement
Section 89K	Insolvency proceedings	Treat the references in paragraphs (a) and (b) of subsection (1) to a relevant firm as references to the building society.
Section 89L	Restrictions on disclosure of confidential information
Section 89M	Giving of notices, documents etc. under Part 1

(3) Any statutory instrument made under a provision specified in the first column of the Table in subsection (2) applies—

(a) to the successor company, or

(b) in a case within subsection (A1)(b) or (1)(b), to the successor company or the specified parent undertaking,

as it applies in relation to a bank, but subject to modifications corresponding to those applying to the provision under which it is made and as if references to a provision modified by subsection (2) or (5) were references to that provision as so modified.

(4) Subsection (3) does not apply where the instrument—

(a) states that it does not apply, or

(b) makes express provision about building societies or their successor companies.

(5) Where a resolution instrument makes provision under section 84A in respect of a building society—

(a) section 81BA (groups: bail-in option) applies with the following modifications—

(i) references to a banking group company are to be read as references to a subsidiary of the building society, and

(ii) the power in subsection (1) of that section is to be exercised only where the Bank of England has exercised the stabilisation power in accordance with section 12A(2) in respect of the parent building society;

(b) section 81CA applies as if references to a banking group company were references to a subsidiary of the building society or of the successor company; and

(5A) Where—

(a) the third stabilisation option is exercised in connection with the fourth stabilisation option in respect of a building society, and

(b) before the third stabilisation option is exercised—

(i) the building society is converted into a company pursuant to section 84A(5)(a), or

(ii) all the property, rights and liabilities of the building society are transferred to a company pursuant to section 84A(5)(b),

the references to the bank in section 12ZA(1)(a) and any other provision so far as relating to property transfer instruments under section 12ZA include a reference to the successor company.

(6) Sections 97 to 102D of the Building Societies Act 1986 (transfer of business of building society to commercial company) do not apply where

(a) a share transfer instrument makes provision under section 84ZA, or

(b) a resolution instrument makes provision under section 84A.

(7) Section 103 of the Building Societies Act 1986 (cancellation of registration) does not apply where

(a) a share transfer instrument makes provision under section 84ZA(3)(e), or

(b) a resolution instrument makes provision under section 84A(7)(e).

(8) In this section—

“company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

“specified parent undertaking” means a company by which in accordance with provision falling within paragraph (g) of section 84ZA(3) or paragraph (a) or (b) of section 84A(8) the successor company is (or is to be) wholly owned;

“the successor company”, in relation to a building society, means the company into which the building society is converted, or to which the property, rights and liabilities of the building society are transferred, as a result of provision made under section 84ZA(2) or 84A(5).

214A

(1) The Treasury may by regulations—

(a) specify a bank which on and after the designation date is designated as an authorised bank for the purposes of this Part,

(b) specify a part of the United Kingdom in which the bank may issue banknotes, and

(2) Regulations under subsection (1)—

(a) may only specify under paragraph (a) a bank (the newly authorised bank) which is in the same group as an authorised bank (the previously authorised bank) which has the right to rely on section 213;

(b) may only specify under paragraph (b) the part of the United Kingdom in which the previously authorised bank is authorised to issue banknotes;

(c) must procure that on and after the designation date the previously authorised bank is no longer an authorised bank for the purposes of this Part by—

(i) in the case of a previously authorised bank within section 210(a), providing that it is no longer an authorised bank for the purposes of this Part;

(ii) in the case of a previously authorised bank within section 210(b), revoking its designation;

(d) must provide for the newly authorised bank to be treated as having issued any banknotes in circulation which were issued by the previously authorised bank;

(e) must provide for the transfer of any rights or liabilities in relation to those banknotes to the newly authorised bank from the previously authorised bank;

(f) may provide for anything done by or in relation to the previously authorised bank in connection with those banknotes to be treated as having been done by or in relation to the newly authorised bank for the purposes specified in the regulations;

(g) may make further provision about banknotes issued by the previously authorised bank;

(h) may make provision about banknotes held by or on behalf of the previously authorised bank which are not in circulation.

(3) The reference in subsection (2)(d) and (g) to banknotes issued by the previously authorised bank includes a reference to banknotes which are to be treated as having been issued by that bank as a result of regulations made under subsection (1) (or any other enactment).

(4) Regulations under subsection (1) must—

(a) specify a date as the designation date, or

(b) if no such date is specified, make provision for the designation date to be determined by the Treasury and published by the Treasury before the designation date in the appropriate Gazettes.

(5) The appropriate Gazettes are the London Gazette and—

(a) if the part of the United Kingdom specified under subsection (1)(b) is Scotland, the Edinburgh Gazette;

(b) if the part of the United Kingdom specified under subsection (1)(b) is Northern Ireland, the Belfast Gazette.

(6) Before specifying a bank under subsection (1)(a) the Treasury must obtain the consent of the Bank of England.

(7) The Bank of England must prepare and publish a statement of the matters which it intends to take into account in deciding whether to give its consent.

(8) The power to make regulations under this section—

(a) is exercisable by statutory instrument;

(b) includes a power to make transitory or saving provision;

(c) includes a power to apply (with or without modifications) or disapply any provision of an Act or subordinate legislation whenever passed or made.

(9) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(10) For the purposes of this section—

“bank” has the same meaning as in Part 1 (see section 2),

“designation date” in relation to regulations under subsection (1) means the date specified or determined, as the case may be, in accordance with subsection (4),

“group” has the meaning given by section 421 of the Financial Services and Markets Act 2000, and

a banknote is in circulation from the time that it is issued by an authorised bank until the time that it is returned to the bank (or a bank which is treated as having issued it as a result of regulations made under subsection (1) or any other enactment).

11A

(1) Subject to subsection (4), the Bank of England must make arrangements for marketing—

(a) any securities issued by the bank which the Bank intends to transfer by a share transfer instrument under section 11(2)(a), or

(b) any property, rights or liabilities of the bank which the Bank intends to transfer by a property transfer instrument under section 11(2)(b).

(2) The arrangements under subsection (1) must—

(a) be as transparent as possible having regard to the circumstances and the need to maintain financial stability;

(b) ensure there is no conflict of interest;

(c) take account of the need for the Bank to act quickly to address the situation where a bank is failing or likely to fail;

(d) aim at maximising, as far as possible, the sale price for the securities or property, rights or liabilities involved.

(3) The arrangements under subsection (1) must not—

(a) materially misrepresent the securities or property, rights or liabilities which the Bank intends to transfer;

(b) favour or discriminate between potential purchasers or grant an unfair advantage to a potential purchaser.

(4) Subsection (1) does not apply if the Bank of England considers that complying with that subsection would undermine one or more of the special resolution objectives.

(5) In particular subsection (1) does not apply if the Bank considers that—

(a) there is a material threat to financial stability in the United Kingdom ... arising from or aggravated by the failure or likely failure of the bank, and

(b) complying with subsection (1) would undermine the effectiveness of the first stabilisation option in addressing that threat or achieving the objective in section 4(4).

(7) Any public disclosure of the marketing which may be required under Article 17(1) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse may be delayed in accordance with Article 17(4) or (5) of that Regulation.

(8) The reference in subsection (7) to Regulation (EU) No 596/2014 is to that Regulation as it forms part of assimilated law.

26ZA

(1) This section applies where the Bank of England has made a share transfer instrument, in respect of securities issued by a bank, in accordance with section 12(2) (“the original instrument”).

(2) The Bank of England may make one or more onward share transfer instruments.

(3) An onward share transfer instrument is a share transfer instrument which—

(a) provides for the transfer of—

(i) securities which were issued by the bank before the original instrument and have been transferred by the original instrument or a supplemental share transfer instrument, or

(ii) securities which were issued by the bank after the original instrument;

(b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).

(4) An onward share transfer instrument may not transfer securities to the transferor under the original instrument.

(5) Sections 7 and 8 do not apply to an onward share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).

(6) Before making an onward share transfer instrument the Bank must consult—

(a) the PRA,

(b) the FCA, and

(7) Section 26 applies where the Bank of England has made an onward share transfer instrument.

44BA

(1) The following provisions apply in relation to a property transfer instrument which makes special bail-in provision under section 44B(1) as they apply in relation to a resolution instrument—

(a) section 48L (powers in relation to securities) ;

(b) section 48O (power to direct directors of the bank);

(d) section 48R (execution and registration of instruments);

(e) section 48S (resolution instruments: general matters);

(f) section 48U (supplemental resolution instruments).

(2) In sections 6E(4)(a)(iii) , 48B, 48X(2)(b)(ii) and 48Y(1)(a) and (2)(a) a reference to a resolution instrument includes a reference to a property transfer instrument which makes special bail-in provision under section 44B(1).

(3) Where special bail-in provision is being made in—

(a) a supplemental property transfer instrument under section 42 in relation to which the original instrument is an onward property transfer instrument under section 43(2), or

(b) an onward property transfer instrument under section 43(2),

references in sections 48B (except in subsection (9)), 48L, 48O and 48U to a bank include a resolution company (whether or not it is a bank).

(4) Where subsection (3) applies, the references in section 48B(3) and (9) to a banking group company, or to a banking group company in relation to a bank, are to a banking group company in relation to the bank in respect of which the Bank of England originally exercised a stabilisation power (and not to a banking group company in relation to the resolution company).

44D

(1) This section applies where the Bank of England has made a share transfer instrument in accordance with section 12(2) (“the original instrument”) providing for the transfer of securities issued by a bank (“the bank”) to a bridge bank.

(2) The Bank of England may make one or more property transfer instruments in relation to the bank (“bridge bank supplemental property transfer instruments”).

(3) A bridge bank supplemental property transfer instrument is an instrument which—

(a) provides for property, rights or liabilities of the bank to be transferred (whether accruing or arising before or after the original instrument);

(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the bank (whether the transfer has been or is to be effected by the instrument or otherwise).

(4) Sections 7 and 8 do not apply to a bridge bank supplemental property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(5) Before making a bridge bank supplemental property transfer instrument the Bank of England must consult—

(a) the PRA,

(b) the FCA, and

(6) The possibility of making a bridge bank supplemental property transfer instrument in reliance on subsection (2) is without prejudice to the possibility of making a property transfer instrument in accordance with section 12(2) (and not in reliance on subsection (2) above).

(7) Section 42 applies where the Bank of England has made a bridge bank supplemental property transfer instrument.

44E

(1) This section applies where the Bank of England has made a bridge bank supplemental property transfer instrument in accordance with section 44D (“the original instrument”).

(2) The Bank of England may make one or more reverse property transfer instruments (“bridge bank supplemental reverse property transfer instruments”) in respect of property, rights or liabilities of the transferee under the original instrument.

(3) A bridge bank supplemental reverse property transfer instrument is an instrument which—

(a) provides for transfer to the transferor under the original instrument;

(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).

(4) Sections 7 and 8 do not apply to a bridge bank supplemental reverse property transfer instrument (but it is to be treated in the same way as any other property transfer instrument for all other purposes including for the purposes of the application of a power under this Part).

(5) The Bank of England must not make a bridge bank supplemental reverse property transfer instrument unless—

(a) the transferee under the original instrument is—

(i) a company wholly owned by the Bank of England,

(ii) a company wholly owned by the Treasury, or

(iii) a nominee of the Treasury, or

(b) it is made with the written consent of the transferee under the original instrument.

(6) Before making a bridge bank supplemental reverse property transfer instrument the Bank of England must consult—

(a) the PRA,

(b) the FCA, and

(7) Section 42 applies where the Bank of England has made a bridge bank supplemental reverse property transfer instrument.

48WA

(1) The Bank of England may, in relation to the exercise of the bail-in option, direct a relevant bank to pay the Bank of England a fee to cover expenses reasonably incurred by the Bank in connection with exercising that option.

(2) The Treasury may direct a relevant bank to pay the Treasury a fee to cover expenses reasonably incurred by the Treasury in connection with the exercise by the Bank of England of the bail-in option in relation to the relevant bank.

(3) For the purposes of this section—

(a) a “relevant bank” is a bank in relation to which the Bank of England has made—

(i) a resolution instrument under section 12A(2),

(ii) a supplemental resolution instrument under section 48U(2), or

(iii) an instrument containing special bail-in provision under section 48B,

(b) the exercise of the bail-in option includes making any instrument containing special bail-in provision under section 48B.

84ZA

(1) This section applies for the purpose of the exercise of the second stabilisation option (transfer to a bridge bank) in relation to a building society.

(2) A share transfer instrument made under section 12(2)(a) may—

(a) convert the building society into a company (“the successor company”), and

(b) make other provision for the purposes of, or in connection with the conversion of the building society.

(3) The provision which may be made under subsection (2)(b) includes—

(a) provision cancelling shares in the building society;

(b) provision cancelling membership rights in the building society;

(d) provision conferring rights and imposing liabilities in place of cancelled shares and membership rights;

(e) provision requiring the FCA to cancel the building society's registration under the Building Societies Act 1986 at a time specified in or determined in accordance with the instrument;

(f) provision that any person approved for the purposes of Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) in relation to the building society immediately before the share transfer instrument is made continues to be approved for those purposes in relation to the successor company (but without affecting the power of the FCA or the PRA to vary or withdraw an approval);

(g) provision for the successor company on its incorporation to be wholly owned by a bridge bank specified in the instrument (the “parent undertaking”);

(h) where provision is made under paragraph (g), provision—

(i) for the transfer of liabilities from the successor company to the parent undertaking, and for the creation of corresponding liabilities of the successor company to the parent undertaking;

(ii) replacing a liability (of any form) of the building society or the successor company with a liability or security (of any form or class) of the parent undertaking.

(4) Section 15 (share transfer instruments) is to be read as if the provision referred to in subsection (1) of that section included the provision referred to in subsections (2) and (3) of this section.

89JA

(1) The provisions of Chapters 1, 3 and 4 of this Part apply in relation to UK branches subject to the modifications specified in subsections (4) to (10) and in the Table in subsection (11).

(2) In this Chapter—

(a) “UK branch” means a branch located in the United Kingdom of a third-country institution authorised for the purpose of the Financial Services and Markets Act 2000 by the PRA or the FCA,

(b) references to the business of a UK branch are to—

(i) any rights and liabilities of the third-country institution arising as a result of the operations of the UK branch, and

(ii) any other property in the United Kingdom of the third-country institution,

(c) “third-country institution” has the same meaning as in section 89H, and a third-country institution is “FCA-regulated” if it does not carry on any activity which is a PRA-regulated activity for the purposes of the Financial Services and Markets Act 2000,

(d) references to a third-country institution are to the third-country institution in respect of whose UK branch the Bank of England—

(i) is considering making a property transfer instrument, or

(ii) has made a property transfer instrument,

(e) “immediate group” has the meaning given by section 421ZA of the Financial Services and Markets Act 2000 .

(3) For the purposes of subsection (2)(b) liabilities arising as a result of the operations of the UK branch include liabilities in respect of deposits—

(a) which are held at the UK branch, or

(b) in respect of which withdrawals may be made at the UK branch,

and “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 , but ignoring the exclusions in article 6.

(4) For section 6E (pre-resolution valuation) , substitute—

(6E) (1) Before the Bank of England makes a property transfer instrument in respect of a UK branch, it must ensure that the business of the UK branch is valued. (2) Unless subsection (3) applies, the Bank of England must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a valuation for the purposes of subsection (1). (3) Where the Bank of England considers that the urgency of the case makes it appropriate to make a property transfer instrument before a valuation can be carried out by a person appointed in accordance with subsection (2), the Bank may carry out a provisional valuation of the business of the UK branch for the purposes of subsection (1). (4) The purpose of a valuation carried out pursuant to subsection (1) is to— (a) inform the decision as to— (i) which stabilisation option should be employed, (ii) what property, rights or liabilities (if any) are to be transferred by a property transfer instrument, (iii) the value of any consideration to be paid to the third-country institution for any property, rights or liabilities so transferred, and (iv) (where special bail-in provision is being made in the property transfer instrument) the extent to which any eligible liabilities should be modified or converted, and (b) ensure that the full extent of any losses on the business of the UK branch is appreciated at the time the Bank of England makes a property transfer instrument. (5) In carrying out a valuation required under subsection (1), the person carrying out the valuation must— (a) make prudent assumptions as to possible rates of default and the severity of losses suffered by the third-country institution; (b) disregard potential financial assistance which may be provided by the relevant third-country authority..., the Bank of England or the Treasury after the Bank has made a property transfer instrument (except for ordinary market assistance offered by the Bank on its usual terms), (c) take account of the fact that— (i) the Bank of England and the Treasury may recover expenses incurred in connection with the making of a property transfer instrument under section 58(2)(b), (ii) the Bank of England and the Treasury may charge interest or fees in respect of any loans or guarantees provided to the third-country institution after the Bank has made a property transfer instrument in respect of its UK branch. (5A) In subsection (5)(b) “relevant third-country authority” means an authority in a country or territory outside the United Kingdom that has functions corresponding to the stabilisation powers of the Bank of England, the FCA or the PRA. (6) The valuation carried out under this section must follow the methodology specified in— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far as they are assimilated law, or (b) technical standards made under subsection 12(a). (7) A valuation under subsection (1) must be accompanied by— (a) a balance sheet of the business of the UK branch as at the date of the valuation, (b) a report on the financial position of the UK branch, (c) an analysis and an estimate of the accounting value of the property and rights of the third-country institution which form part of the business of the UK branch, (d) a list of the outstanding liabilities of the third-country institution which form part of the business of the UK branch (including any off-balance sheet liabilities), with the creditors subdivided into classes according to the priority their claims would receive in insolvency proceedings, and (e) an estimate of the amount that each class of creditors and shareholders might be expected to receive if the third-country institution went into insolvency proceedings. (8) For the purposes of subsection (7) “insolvency proceedings” means such insolvency proceedings (whether or not under the law of a country or territory outside the United Kingdom) as the person carrying out the valuation, after consultation with the Bank of England and the Treasury, considers relevant. (9) Where appropriate, the information in subsection (7)(c) may be supplemented by an analysis and estimate of the value of the business of the UK branch on a market value basis in order to inform the decision referred to in paragraph (a)(ii) or (iii) of subsection (4). (10) Where a provisional valuation is carried out under subsection (3)— (a) the Bank of England need only comply with subsection (7) as far as it is reasonable to do so in the circumstances, and (b) the requirement in subsection (8) to consult the Bank of England does not apply. (11) A provisional valuation carried out under subsection (1) must make provision in respect of additional losses by the third-country institution in accordance with— (a) any Commission Regulation containing regulatory technical standards adopted by the European Commission under article 36.16 of the recovery and resolution directive, so far are as they are assimilated law, or (b) technical standards made under subsection (12)(b). (12) The Bank of England may make technical standards relating to— (a) the methodology for assessing the value of the assets and liabilities of a branch for the purposes of a valuation under this section; (b) the methodology for calculating and including a buffer for additional losses in the provisional valuation.

(5) For section 7 (general conditions), substitute—

(7) (1) The Bank of England may make a property transfer instrument in respect of a UK branch only if the Treasury has approved the making of the instrument, and one of the following applies— (a) the PRA (or in the case of a third-country institution which is FCA-regulated, the FCA) is satisfied that Condition 1 is met, and the Bank of England is satisfied that Conditions 2, 4 and 5 are met, or (b) the Bank of England is satisfied that Conditions 3 and 4 are met, or (c) the Bank of England is satisfied that Condition 4 is met and Condition 5 is met by virtue of subsection 6(a). (2) Condition 1 is that the third-country institution 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 action will be taken by or in respect of the third-country institution that will result in Condition 1 ceasing to be met. (4) Condition 3 is that— (a) the third-country institution is unable or unwilling, or is likely in the near future to be unable or unwilling, to pay its debts or other liabilities owed to UK creditors or otherwise arising from the business of the UK branch as they fall due, and (b) no third-country resolution action has been taken, no normal insolvency proceedings have been initiated, and no such action or proceedings are likely in the near future to be taken or initiated, in relation to the institution. (5) Condition 4 is that making a property transfer instrument is necessary having regard to the public interest in the advancement of one or more of the special resolution objectives. (6) Condition 5 is that— (a) third-country resolution action has been taken, or the Bank of England has been notified that such action will be taken, in relation to the third-country institution and the Bank has refused or proposes to refuse to recognise such action for one or more of the reasons specified in section 89H(4), or (b) third-country resolution action has not been, and is not likely to be, taken in relation to the third-country institution. (7) For the purposes of Condition 1, a third-country institution is failing or likely to fail if 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 (or in the case of an FCA-regulated third-country institution, the FCA) under section 55J of the Financial Services and Markets Act 2000 of the institution's permission under Part 4A of that Act to carry on one or more regulated activities in the United Kingdom. (8) “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 (or in the case of an FCA-regulated third-country institution, the FCA) is treated as responsible under subsection (2) of that section. (9) For the purposes of Condition 3— - “UK creditor”, in relation to a third-country institution, means a creditor of the institution who— 1. in the case of an individual, is ordinarily resident in the United Kingdom; and 2. in the case of a body corporate or unincorporated association, has its head office in the United Kingdom. (10) For the purposes of Conditions 3 and 5, “third-country resolution action” has the meaning given in section 89H(7). (11) Before determining that Condition 1 is met, the PRA (or in the case of an FCA-regulated third-country institution, the FCA) must consult the Bank of England. (12) Before determining whether or not Condition 2 or 4 is met the Bank of England must, subject to subsection (13), consult— (a) the PRA, (b) the FCA, and (c) the Treasury. (13) In the case of an FCA-regulated third-country institution, the Bank of England need only consult the PRA before determining whether or not Condition 2 or 4 is met if the third-country institution has as a member of its immediate group a PRA-authorised person.

(6) For section 7A (effect on other group members, financial stability in EU etc) substitute—

(7A) Where the Bank of England is considering making a property transfer instrument in respect of a UK branch of a third-country institution which is a member of a group, the Bank must have regard to— (a) the need to minimise the effect of making the property transfer instrument on other undertakings in the same group, (b) the need to minimise any adverse effects on the financial stability of the United Kingdom, and (c) the potential effect of making the property transfer instrument on the financial stability of the country or territory in which the head office of the third-country institution is established, and any other country or territory (other than the United Kingdom) in which any member of the group is operating.

(7) For section 44B (property transfer instruments: special bail-in provision), substitute—

(44B) (1) A property transfer instrument within subsection (2) may make special bail-in provision (see section 48B) with respect to the liabilities of the third-country institution or the resolution company which are being transferred by that instrument (“transferred liabilities”). (2) The instruments referred to in subsection (1) are— (a) a property transfer instrument under section 11(2), 12(2) or 12ZA(3), (b) a supplemental property transfer instrument under section 42 in relation to which the original instrument is— (i) a property transfer instrument under section 11(2), 12(2) or 12ZA(3), or (ii) an onward property transfer instrument under section 43(2), or (c) an onward property transfer instrument under section 43(2). (3) In the case of— (a) a property transfer instrument under section 12(2) or 12ZA(3), (b) a supplemental property transfer instrument under section 42 in relation to which the original instrument is— (i) a property transfer instrument under section 12(2) or 12ZA(3), or (ii) an onward property transfer instrument under section 43(2), or (c) an onward property transfer instrument under section 43(2), the power under subsection (1) to make the provision described in section 48B(1)(a) (see also rule 2(a) and (b) of section 48B(5)) includes power to make the provision referred to in subsection (4). (4) The provision referred to in subsection (3) is provision replacing a transferred liability (of any form)— (a) of the third-country institution mentioned in subsection (1), in the case of instruments within subsection (3)(a) and (b)(i), (b) of the resolution company mentioned in section 43(1), in the case of instruments within subsection (3)(b)(ii) and (c), with a relevant security (of any form or class). (5) The following are relevant securities for the purpose of subsection (4)— (a) where the instrument within subsection (3)(a), or the original instrument, is made under section 12, a security of the bridge bank mentioned in section 12(1), (b) where the instrument within subsection (3)(a), or the original instrument, is made under section 12ZA, a security of the asset management vehicle mentioned in section 12ZA(1). (6) In subsection (5), references to the original instrument are— (a) in relation to an instrument within subsection (3)(b), the original instrument referred to in that paragraph, (b) in relation to an instrument within subsection (3)(c), the original instrument as defined in section 43(1). (7) Where securities of the bridge bank or asset management vehicle (“B”) are, as a result of subsection (3), held by a person other than the Bank of England, that does not prevent B from being regarded for the purposes of this Part (see particularly section 12(1A) and 12ZA(2)) as being wholly owned by the Bank of England, as long as the Bank of England is entitled to exercise, or control the exercise of, voting rights in respect of all the ordinary shares issued by B.

(8) For section 48B (special bail-in provision), substitute—

(48B) (1) “Special bail-in provision”, for the purposes of section 44B(1), means any of the following (or any combination of the following)— (a) provision modifying, or changing the form of, a relevant liability; (b) provision that a contract under which the relevant institution has a relevant liability is to have effect as if a specified right had been exercised under it. (2) “Special bail-in provision”, for the purposes of section 44B, also includes any associated provision (see subsection (3)) that the Bank of England may think it appropriate to make in consequence of any provision under subsection (1) that— (a) is made in the same property transfer instrument, or (b) has been made in another property transfer instrument in respect of the UK branch, or (where the institution in relation to which special bail-in provision is made is a resolution company) in respect of the resolution company. (3) “Associated provision” means provision modifying a contract under which a company which is a banking group company in relation to the third-country institution has a liability (whether or not the institution in relation to which special bail-in provision is made is the third-country institution). (4) A power to make special bail-in provision— (a) may be exercised only for the purpose of, or in connection with, reducing or deferring a relevant liability of the relevant institution; (b) may not be exercised so as to affect any excluded liability. (5) The following rules apply to the interpretation of subsection (1). 1 The reference to modifying a relevant liability includes a reference to modifying the terms (or the effect of the terms) of a contract under which the relevant institution has a liability. 2 The reference to changing the form of a relevant liability, includes, for example— (a) converting an instrument under which the relevant institution owes a relevant liability from one form or class to another, (b) replacing such an instrument with another instrument of a different form or class, or (c) converting those liabilities into securities issued by a bridge bank or a UK parent undertaking. (6) For the purposes of rule 2 in subsection (5)— - “parent undertaking” has the meaning given by Article 4.1(15)(a) of the capital requirements regulation, and - “UK parent undertaking” means a parent undertaking that is incorporated in, or formed under the law of, any part of the United Kingdom. (7) Examples of special bail-in provision include— (a) provision that transactions or events of any specified kind have or do not have (directly or indirectly) specified consequences or are to be treated in a specified manner for specified purposes; (b) provision discharging persons from further performance of obligations under a contract and dealing with the consequences of persons being so discharged. (8) The form and class of the instrument (“the resulting instrument”) into which an instrument is converted, or with which it is replaced, do not matter for the purposes of paragraphs (a) and (b) of rule 2 in subsection (5); for instance, the resulting instrument may (if it is a security) fall within Class 1 or any other Class in section 14. (9) Liabilities of the relevant institution are “excluded liabilities” if they are— (a) liabilities listed in subsection (10), or (b) liabilities which the Bank of England has excluded under subsection (12) from the application of special bail-in provision. (10) The following liabilities of the relevant institution are the excluded liabilities referred to in subsection (9)(a)— (a) liabilities representing protected deposits; (b) any liability, so far as it is secured; (c) liabilities that the relevant institution has by virtue of holding client assets; (d) liabilities with an original maturity of less than 7 days owed by the relevant institution to a credit institution or investment firm; (e) liabilities with a remaining maturity of less than 7 days arising from participation in designated settlement systems and owed to such systems or to operators of, or participants in, such systems; (ea) liabilities with a remaining maturity of less than 7 days owed by the relevant institution to a recognised central counterparty ... or a third country central counterparty; (f) liabilities owed to an employee or former employee in relation to salary or other remuneration, except— (i) variable remuneration that is not regulated by a collective bargaining agreement, and (ii) variable remuneration of material risk takers within the meaning of rule 3 of Part 152 (remuneration) of the PRA rulebook (other than persons deemed by virtue of rule 3.2 not to be material risk takers and notified to the PRA in accordance with rule 3.2); (g) liabilities owed to a pension scheme, except for liabilities owed in connection with variable remuneration of the kind mentioned in paragraph (f)(i) or (ii); (h) liabilities owed to creditors arising from the provision to the relevant institution of goods or services (other than financial services) that are critical to the daily functioning of the operations of the third-country institution or of its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company); (i) liabilities owed by the relevant institution to the scheme manager of the FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) or (4) of the Financial Services and Markets Act 2000; (j) liabilities owed by the relevant institution to another institution or a banking group company which (in either case)— (i) is part of the same resolution group as the relevant institution, and (ii) is not itself a resolution entity, where the liabilities do not rank below ordinary non-preferential debts under the hierarchy of claims in normal insolvency proceedings. (11) The following special rules apply in cases involving banking group companies (whether or not the institution in relation to which special bail-in provision is made is the third-country institution)— (a) a liability is not within subsection (10)(d) if the credit institution or investment firm to which the liability is owed is a banking group company in relation to the third-country institution (see section 81D); (b) in subsection (10)(h) the reference to creditors does not include companies which are banking group companies in relation to the third-country institution. (12) The Bank of England may, in a property transfer instrument, exclude any bail-in liability or class of bail-in liabilities from the application of any special bail-in provision in relation to a relevant institution under section 44B if, and only if, the Bank of England— (a) thinks the exclusion is justified on one or more of the grounds set out in subsection (14), ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) The power conferred by subsection (12) may be exercised to exclude only part of a bail-in liability, or part of each of the bail-in liabilities of a particular class; and where it is so exercised that part is treated as a bail-in liability excluded under that subsection and the remainder is treated as a bail-in liability which has not been so excluded. (14) The grounds are— (a) that it is not reasonably possible to give effect to special bail-in provision in relation to the liability or class within a reasonable time; (b) that the exclusion is necessary and proportionate to achieve the continuity of critical functions and core business lines in a manner that maintains the ability of the third-country institution or its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company) to continue key operations, services and transactions; (c) that the exclusion is necessary and proportionate to avoid giving rise to widespread contagion, in particular as regards protected deposits held by natural persons or micro, small and medium-sized enterprises, which would severely disrupt the functioning of financial markets, including financial market infrastructures, in a manner that could cause a serious disturbance to the economy of the United Kingdom; (d) that the making of special bail-in provision in relation to the liability would cause a reduction in value such that the losses borne by other creditors would be higher than if the liability were excluded. (15) When deciding whether to exclude liabilities under subsection (12) or (13), the Bank of England must give due consideration to— (a) the principle that all the relevant liabilities of the relevant institution ought to be treated in accordance with the priority they would enjoy if the relevant institution went into insolvency proceedings, and (b) the principle that any creditors who would have equal priority in insolvency proceedings ought to bear losses on an equal footing with each other, and for the purposes of this subsection “insolvency proceedings” means such insolvency proceedings (whether or not under the law of a country or territory outside the United Kingdom) as the Bank of England, after consultation with the Treasury, considers relevant. (17) For the purposes of subsection (14)— - “core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for the third-country institution or its UK branch (or in the case of an instrument made in relation to a resolution company, of the resolution company); - “protected deposit” has the meaning given by section 48C, and - “micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC. (17A) For the purposes of the definition of “core business lines” Article 7 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of core business lines) applies. (17B) The Treasury may by regulations made by statutory instrument specify criteria for the determination of the business lines and associated services referred to in the definition of “core business lines”. (17C) The power conferred by subsection (16) includes— (a) power to amend or revoke Article 7 of Commission Delegated Regulation (EU) 2016/778; and (b) power to amend or repeal subsection (17A). (17D) A statutory instrument containing regulations under subsection (17B) is subject to annulment in pursuance of a resolution of either House of Parliament. (18) For the purposes of this section— (a) “relevant liability” means a liability of a third-country institution or resolution company which is transferred in the property transfer instrument which makes special bail-in provision, (b) “relevant institution” means the third-country institution or resolution company whose liabilities are so transferred.

(9) For section 48X (replacement of Bank's provisional valuation), substitute—

(48X) (1) Where the Bank of England has carried out a provisional valuation under section 6E(3) before making a property transfer instrument in relation to a UK branch, the Bank must arrange for the appointment of an independent valuer in accordance with section 62A to carry out a full valuation in accordance with this section as soon as reasonably practicable. (2) The purpose of the valuation carried out under subsection (1) is to— (a) ensure the full extent of any losses on the property and rights of the third-country institution which formed part of the business of the UK branch is recognised in the accounting records of the third-country institution, and (b) inform a decision by the Bank as to whether— (i) additional consideration should be paid by a bridge bank or asset management vehicle for any property, rights or liabilities transferred by the property transfer instrument, or (ii) the Bank should exercise the power under section 48Y(1) to increase a liability which has been reduced by the property transfer instrument. (3) A valuation carried out under subsection (1) must comply with subsections (5) and (6) of section 6E, and be accompanied by the information required in subsection (7) of that section.

(10) For section 48Y (consequences of a replacement valuation)—

(48Y) (1) Where the independent valuation carried out under section 48X(1) produces a higher valuation of the net asset value of the business of the UK branch transferred by the property transfer instrument than the provisional valuation carried out under section 6E(3), the Bank of England may— (a) modify any liability of the third-country institution which has been reduced or deferred by the property transfer instrument so as to increase or reinstate that liability; or (b) instruct a resolution company to pay additional consideration to the third-country institution for any property, rights or liabilities transferred to the resolution company by a property transfer instrument. (2) The power in subsection (1)(a)— (a) may not be exercised so as to increase the value of the liability beyond the value it would have had if the property transfer instrument which reduced or deferred it had not been made, and (b) must be exercised by a supplemental property transfer instrument (whether or not that instrument contains any other provision authorised by this Part).

(11) The Table mentioned in subsection (1) is as follows—

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