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

(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;

(b) some or all of the administrative or other expenses incurred in connection with the provisions of this Part.

(2A) In subsection (2), “public 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.

(3) A resolution fund order may include provision for—

(a) an independent valuer to make a determination under the order (in which case sections 54(2) to (5), 55 and 56 shall apply);

(b) valuation principles to be applied in making a determination (in which case section 57(2) shall apply).

(4) A resolution fund order may confer a discretionary function on—

(a) a Minister of the Crown,

(b) the Treasury,

(d) any other specified person.

(5) A resolution fund order may include provision for the determination of disputes about the application of its provisions (whether by conferring jurisdiction on a court or tribunal or otherwise).

(6) A resolution fund order may require the Bank of England in managing a resolution company to aim to maximise the proceeds available for distribution in accordance with the order; and an order which includes a requirement must—

(a) specify its extent, and

(b) include provision about how the Bank is to comply with it.

(7) A resolution fund order may require the Treasury to ensure that a bank in temporary public ownership in accordance with section 13(2) is managed with the aim of maximising the proceeds available for distribution in accordance with the order; and an order which includes a requirement must—

(a) specify its extent, and

(b) include provision about how the Treasury is to comply with it.

(8) A requirement under subsection (6) or (7) is to be complied with only in so far as is compatible with—

(a) pursuit of the special resolution objectives, and

(b) compliance with the code of practice under section 5.

Third party compensation: discretionary provision

59

(1) A power or duty in this Part to make a third party compensation order is a power or duty to make provision establishing a scheme for paying compensation to persons other than a transferor.

(2) A third party compensation order may—

(a) form part of a compensation scheme order or resolution fund order, or

(b) be a separate order.

(3) A third party compensation order may include provision for—

(a) an independent valuer (in which case sections 54 to 56 shall apply);

(b) valuation principles (in which case section 57(2) to (5) shall apply).

Third party compensation: mandatory provision

60

(1) The Treasury may make regulations about third party compensation arrangements in the case of partial property transfers.

(2) In making regulations the Treasury shall, in particular, have regard to the desirability of ensuring that if a residual bank enters insolvency after transfer, pre-transfer shareholders or creditors do not receive less favourable treatment than they would have received had it entered insolvency immediately before transfer.

(3) In subsection (2)—

(a) “residual bank” means a bank that is a transferor under a property transfer instrument,

(b) “pre-transfer shareholder or creditor” means a person who—

(i) holds securities issued by, or is a creditor of, a residual bank immediately before a property transfer instrument takes effect, and

(ii) satisfies conditions specified by the regulations, and

(c) the reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) a composition with creditors, and (vii) a scheme of arrangement.

(4) The regulations may—

(a) require a compensation scheme order or a resolution fund order to include a third party compensation order;

(b) require a third party compensation order to include provision of a specified kind or to specified effect;

(c) make provision which is to be treated as forming part of a third party compensation order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification).

(5) Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement—

(a) to depend in part upon the amounts which are or may be payable under a resolution fund order;

(b) to be contingent upon the occurrence or non-occurrence of specified events;

(c) to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or resolution fund order.

(6) Regulations may make provision about payment including, in particular, provision for payments—

(a) on account subject to terms and conditions;

(b) by instalment.

(7) Regulations—

(a) shall be made by statutory instrument, and

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

Sources of compensation

61

(1) This section applies to—

(a) compensation scheme orders,

(b) resolution fund orders,

(ca) bail-in compensation orders,

(d) regulations under section 60, and

(e) regulations under section 60A.

(2) An order or regulations may provide for compensation or other payments to be made by—

(a) the Treasury,

(b) the Financial Services Compensation Scheme, subject to section 214C of the Financial Services and Markets Act 2000 (limit on amount of special resolution regime payments), or

Procedure

62

(1) This section applies to—

(a) compensation scheme orders,

(b) resolution fund orders, ...

(ba) bail-in compensation orders, and

(2) An order—

(a) shall be made by statutory instrument, and

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

Incidental functions

General continuity obligation: property transfers

63

(1) In this section and section 64—

(a) “residual bank” means a bank all or part of whose business has been transferred in accordance with section 11(2)(b), 12(2) , 12ZA(3) , 41A(2) or 44D(2) ,

(b) “group company” means anything which is, or was immediately before the transfer, a group undertaking in relation to a residual bank,

(d) “the transferred business” means the part of the bank's business that has been transferred, and

(e) “transferee” means a commercial purchaser or resolution company to whom all or part of the transferred business has been transferred.

(1A) In this section a reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors and (vii) a scheme of arrangement.

(2) The residual bank and each group company must provide such services and facilities as are required to enable a transferee to operate the transferred business, or part of it, effectively.

(3) The duty under subsection (2) (the “continuity obligation”) may be enforced as if created by contract between the residual bank or group company and the transferee.

(3A) The continuity obligation continues to apply despite the residual bank or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(2) of the Insolvency (Northern Ireland) Order 1989.

(4) The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

(4A) But if the services and facilities provided in pursuance of the continuity obligation were provided to the bank whose business has been transferred, under an agreement with that bank, before the property transfer instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and subsection (4) does not apply).

(5) The continuity obligation is not limited to the provision of services or facilities directly to a transferee.

(6) The Bank of England may, with the consent of the Treasury, by notice to the residual bank or a group company state that in the Bank's opinion—

(a) specified activities are required to be undertaken in accordance with the continuity obligation;

(b) activities are required be undertaken in accordance with the continuity obligation on specified terms.

(7) A notice under subsection (6) shall be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

Special continuity obligations: property transfers

64

(1) Expressions in this section have the same meaning as in section 63.

(2) The Bank of England may—

(a) cancel a contract or other arrangement between the residual bank and a third party (whether or not rights or obligations under it have been transferred to a transferee);

(b) modify the terms of a contract or other arrangement between the residual bank and a third party (whether or not rights or obligations under it have been transferred to a transferee);

(c) add or substitute a transferee as a party to a contract or other arrangement between the residual bank and a third party;

(d) confer and impose rights and obligations on a group company and a transferee, which shall have effect as if created by contract between them;

(e) confer and impose rights and obligations on the residual bank and a transferee which shall have effect as if created by contract between them.

(3) In modifying or setting terms under subsection (2) the Bank of England shall aim, so far as is reasonably practicable, to preserve or include—

(a) provision for reasonable consideration, and

(b) any other provision that would be expected in arrangements concluded between parties dealing at arm's length.

(4) The power under subsection (2) must be exercised by way of provision in a property transfer instrument (or supplemental instrument).

(5) The power in subsection (2)(d) and (e) may be exercised only—

(a) in so far as the Bank of England thinks it necessary to do so to ensure the provision of such services and facilities as are required to enable the transferee to operate the transferred business, or part of it, effectively, and

(b) with the consent of the Treasury.

(6) An obligation imposed on the residual bank or a group company under subsection (2)(d) or (e) continues to apply despite the residual bank or group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(2) of the Insolvency (Northern Ireland) Order 1989.

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

Continuity obligations: onward property transfers

65

(1) In this section—

(a) “onward transfer” means a transfer of property, rights or liabilities (whether or not under a power in this Part) from—

(i) a person who is a transferee under a property transfer instrument under section 12(2) or 12ZA(3) (an “original transferee”), or

(ii) a bank, securities issued by which were earlier transferred by a share transfer instrument under section 12(2) or a share transfer order under section 13(2), and

(b) the person to whom the onward transfer is made is referred to as an “onward transferee”.

(2) The continuity authority may—

(a) provide for an obligation under section 63 to apply in respect of an onward transferee;

(b) extend section 64 so as to permit action to be taken under section 64(2) for the purpose of enabling an onward transferee to operate transferred business, or part of it, effectively.

(3) “The continuity authority” means—

(a) the Bank of England, where subsection (1)(a)(i) applies, and

(b) the Treasury, where subsection (1)(a)(ii) applies.

(4) Subsection (2) may be relied on to impose obligations on—

(a) an original transferee (where the original transfer was a property transfer),

(b) a residual bank within the meaning of section 63 (where the original transfer was a property transfer),

(d) anything which is or was a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) of anything within paragraphs (a) to (c), or

(e) any combination.

(5) Subsection (2) may be used to impose obligations—

(a) in addition to obligations under or by virtue of section 63 or 64, or

(b) replacing obligations under or by virtue of either of those sections to a specified extent.

(6) A power under subsection (2) is exerciseable by giving a notice to each person—

(a) on whom a continuity obligation is to be imposed under the power, or

(b) who is expected to benefit from a continuity obligation under the power.

(7) Sections 63(3) to (7) and 64(3) and (4) apply to an obligation as applied under subsection (2)—

(a) construing “transferred business” as the business transferred by means of the onward transfer, and

(b) with any other necessary modification.

(8) The Bank of England may act under or by virtue of subsection (2) only with the consent of the Treasury.

66

(1) In this section and section 67—

(a) “transferred bank” means a bank all or part of the ownership of which has been transferred in accordance with section 11(2)(a), 12(2)(a) or 13(2), or which falls within subsection (1A),

(b) “former group company” means anything which was a group undertaking in relation to the transferred bank immediately before the transfer (whether or not it is also a group undertaking in relation to the transferred bank immediately after the transfer),

(d) “the continuity authority” means—

(i) the Bank of England, where ownership was transferred in accordance with section 11(2)(a), 12(2)(a), or in a case falling within subsection (1A), and

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

(1ZA) In this section a reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors and (vii) a scheme of arrangement.

(1A) A bank falls within this subsection if a mandatory reduction instrument or resolution instrument (or supplemental resolution instrument) has changed the ownership of the bank (wholly or partly) by providing for the transfer, cancellation or conversion from one form or class to another of securities issued by the bank (and the reference in subsection (1)(b) to “the transfer” includes such a cancellation or conversion).

(2) Each former group company must provide such services and facilities as are required to enable the transferred bank to operate effectively.

(3) The duty under subsection (2) (the “continuity obligation”) may be enforced as if created by contract between the transferred bank and the former group company.

(3A) The continuity obligation continues to apply despite the former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.

(4) The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.

(4A) But if the services and facilities provided in pursuance of the continuity obligation were provided to the transferred bank, under an agreement with that bank, before the share transfer instrument or order or the resolution instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and subsection (4) does not apply).

(5) The continuity obligation is not limited to the provision of services or facilities directly to the transferred bank.

(6) The continuity authority may by notice to a former group company state that in the authority's opinion—

(a) specified activities are required to be undertaken in accordance with the continuity obligation;

(b) activities are required be undertaken in accordance with the continuity obligation on specified terms.

(7) A notice under subsection (6) shall be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.

(8) The Bank of England may act under or by virtue of subsection (6) only with the consent of the Treasury.

67

(1) Expressions in this section have the same meaning as in section 66.

(2) The continuity authority may—

(a) cancel a contract or other arrangement between the transferred bank and a third party;

(b) modify the terms of a contract or other arrangement between the transferred bank and a third party;

(c) confer and impose rights and obligations on a former group company and the transferred bank, which shall have effect as if created by contract between them.

(3) In modifying or setting terms under subsection (2) the continuity authority shall aim, so far as is reasonably practicable, to preserve or include—

(a) provision for reasonable consideration, and

(b) any other provision that would be expected in arrangements concluded between parties dealing at arm's length.

(4) The power under subsection (2) must be exercised by way of provision in a share transfer instrument or order or resolution instrument (or supplemental instrument or order).

(5) The power in subsection (2)(c) may be exercised—

(a) only in so far as the continuity authority thinks it necessary to do so to ensure the provision of such services and facilities as are required to enable the transferred bank to operate effectively, and

(b) by the Bank of England only with the consent of the Treasury.

(6) An obligation imposed on the transferred bank or a former group company under subsection (2)(b) or (c) continues to apply despite the transferred bank or former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(2) of the Insolvency (Northern Ireland) Order 1989.

68

(1) In this section “onward transfer” means a transfer (whether or not under a power in this Part) of securities issued by a bank where—

(a) securities issued by the bank were earlier transferred by a share transfer instrument under section 12(2), a resolution instrument under section 12A(2) or supplemental resolution instrument under section 48U(2) or a share transfer order under section 13(2), or

(b) the bank was the transferee under a property transfer instrument under section 12(2).

(2) The continuity authority may—

(a) provide for an obligation under section 66 to apply in respect of the bank after the onward transfer;

(b) extend section 67 so as to permit action to be taken under section 67(2) to enable the bank to operate effectively after the onward transfer.

(3) In this section “continuity authority” has the same meaning as in sections 66 and 67.

(4) Subsection (2) may be relied on to impose obligations on—

(a) the bank,

(b) anything which is or was a group undertaking (within the meaning of section 1161(5) of the Companies Act 2006) of the bank,

(d) any combination.

(5) Subsection (2) may be used to impose obligations—

(a) in addition to obligations under or by virtue of section 66 or 67, or

(b) replacing obligations under or by virtue of either of those sections to a specified extent.

(6) A power under subsection (2) is exerciseable by giving a notice to each person—

(a) on whom a continuity obligation is to be imposed under the power, or

(b) who is expected to benefit from a continuity obligation under the power.

(7) Sections 66(3) to (7) and 67(3) and (4) apply to an obligation as applied under subsection (2) with any necessary modification.

(8) The Bank of England may act under or by virtue of subsection (2) only with the consent of the Treasury.

Continuity obligations: consideration and terms

69

(1) The Treasury may by order specify matters which are to be or not to be considered in determining—

(a) what amounts to reasonable consideration for the purpose of sections 63 to 68;

(b) what provisions to include in accordance with section 64(3)(b) or 67(3)(b).

(2) An order—

(a) shall be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(3) A continuity authority may give guarantees or indemnities in respect of consideration for services or facilities provided or to be provided in pursuance of a continuity obligation.

(4) In this section “continuity authority”—

(a) in relation to sections 63 and 64, means the Bank of England, and

(b) in relation to sections 65 to 68, has the same meaning as in those sections.

Continuity obligations: termination

70

(1) The continuity authority may by notice terminate an obligation arising under section 63 or 66.

(2) The power under subsection (1) is exerciseable by giving a notice to each person—

(a) on whom the obligation is imposed, or

(b) who has benefited or might have expected to benefit from the obligation.

(3) In this section “continuity authority”—

(a) in relation to section 63, means the Bank of England, and

(b) in relation to section 66, has the same meaning as in that section.

(4) A reference in subsection (1) to obligations under a section includes a reference to obligations under that section as applied under section 65 or 68.

Pensions

71

(1) This section applies to—

(za) mandatory reduction instruments,

(a) share transfer orders,

(b) share transfer instruments, ...

(d) resolution instruments.

(2) An order or instrument may make provision—

(a) about the consequences of a transfer for a pension scheme;

(b) about property, rights and liabilities of any pension scheme of the bank.

(3) In particular, an order or instrument may—

(a) modify any rights and liabilities;

(b) apportion rights and liabilities;

(4) Provision by virtue of this section may (but need not) amend the terms of a pension scheme.

(5) A share or property transfer instrument may make provision in reliance on this section only with the consent of the Treasury.

(6) In this section—

(a) “pension scheme” includes any arrangement for the payment of pensions, allowances and gratuities, and

(b) a reference to a pension scheme of a bank is a reference to a scheme in respect of which the bank, or a group company of the bank, is or was an employer.

(7) In subsection (6)(b) the reference to a group company of the bank is a reference to anything that is or was a group undertaking in relation to the bank within the meaning given by section 1161(5) of the Companies Act 2006.

Enforcement

72

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

Disputes

73

(1) This section applies to—

(za) mandatory reduction instruments,

(a) share transfer orders,

(b) share transfer instruments, ...

(d) resolution instruments, and

(e) third-country instruments.

(2) An order or instrument may include provision for disputes to be determined in a specified manner.

(3) Provision by virtue of subsection (2) may, in particular—

(a) confer jurisdiction on a court or tribunal;

(b) confer discretion on a specified person.

Tax

74

(1) The Treasury may by regulations make provision about the fiscal consequences of the exercise of the power to make a mandatory reduction instrument or a stabilisation power.

(2) Regulations may relate to—

(a) capital gains tax;

(b) corporation tax;

(d) inheritance tax;

(e) stamp duty;

(f) stamp duty land tax;

(g) stamp duty reserve tax.

(3) Regulations may apply to—

(a) anything done in connection with an instrument or order;

(b) things transferred or otherwise affected by virtue of an instrument or order;

(d) persons otherwise affected by an instrument or order.

(4) Regulations may—

(a) modify or disapply an enactment;

(b) provide for an action to have or not have specified consequences;

(c) provide for specified classes of property (including securities), rights or liabilities to be treated, or not treated, in a specified way;

(d) withdraw or restrict a relief;

(e) extend, restrict or otherwise modify a charge to tax;

(f) provide for matters to be determined by the Treasury in accordance with provision made by or in accordance with the regulations.

(5) Regulations may make provision for the fiscal consequences of the exercise of the power to make a mandatory reduction instrument or a stabilisation power in respect of things done—

(a) during the period of three months before the date on which the power to make the mandatory reduction instrument or (as the case may be) the stabilisation power is exercised, or

(b) on or after that date.

(5A) Where the mandatory reduction provision required by section 6B is made in two or more mandatory reduction instruments, in subsection (5)(a) above the reference to the date on which the power to make the mandatory reduction instrument is exercised is, in relation to any of those instruments, a reference to the date on which the power is exercised to make the first of those instruments.

(6) In relation to the exercise of a supplemental or onward instrument or order under section 26, 27, 28, 30, 42, 43, 45, 48U or 48V, in subsection (5)(a) above “the stabilisation power” is a reference to the first stabilisation power in connection with which the supplemental or onward instrument or order is made.

(7) The Treasury may by order amend subsection (2) so as to—

(a) add an entry, or

(b) remove an entry.

(8) Regulations or an order under this section—

(a) shall be made by statutory instrument, and

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

Power to change law

75

(1) The Treasury may by order amend the law for the purpose of enabling the powers under this Part to be used effectively, having regard to the special resolution objectives.

(2) An order may be made—

(a) for the general purpose of the exercise of powers under this Part,

(b) to facilitate a particular proposed or possible use of a power, or

(3) An order under subsection (2)(c) may make provision which has retrospective effect in so far as the Treasury consider it necessary or desirable for giving effect to the particular exercise of a power under this Act in connection with which the order is made (but in relying on this subsection the Treasury shall have regard to the fact that it is in the public interest to avoid retrospective legislation).

(4) In subsection (1) “amend the law” means—

(a) disapply or modify the effect of a provision of an enactment (other than a provision made by or under this Act),

(b) disapply or modify the effect of a rule of law not set out in legislation, or

(5) Provision under this section may relate to this Part as it applies—

(a) to banks,

(b) to building societies,

(ca) to investment firms,

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

(cc) to third-country institutions,

(cd) to UK branches, or

(d) to any combination.

(6) Specific powers under this Part are without prejudice to the generality of this section.

(7) An order—

(a) shall be made by statutory instrument, and

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

(8) But if the Treasury think it necessary to make an order without complying with subsection (7)(b)—

(a) the order may be made,

(b) the order shall lapse unless approved by resolution of each House of Parliament during the period of 28 days (ignoring periods of dissolution, prorogation or adjournment of either House for more than 4 days) beginning with the day on which the order is made,

(c) the lapse of an order under paragraph (b) does not invalidate anything done under or in reliance on the order before the lapse and at a time when neither House has declined to approve the order, and

(d) the lapse of an order under paragraph (b) does not prevent the making of a new order (in new terms).

(9) For the purposes of this section—

“third-country institution” has the same meaning as in section 48Z;

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

Treasury

International obligation notice: general

76

(1) The Bank of England may not exercise the power to make a resolution administrator appointment instrument or a mandatory reduction instrument or a stabilisation power in respect of a bank if the Treasury notify the Bank that the exercise would be likely to contravene an international obligation of the United Kingdom.

(2) A notice under subsection (1)—

(a) must be in writing, and

(b) may be withdrawn (generally, partially or conditionally).

(3) If the Treasury give a notice under subsection (1) the Bank of England must consider other exercises of the power to make a resolution administrator appointment instrument or a mandatory reduction instrument or the stabilisation powers with a view to—

(a) pursuing the special resolution objectives, and

(b) avoiding the objections on which the Treasury's notice was based.

(4) The Treasury may by notice to the Bank of England disapply subsection (3) in respect of a bank; and a notice may be revoked by further notice.

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

International obligation notice: bridge bank

77

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

(2) The Bank of England must comply with any notice of the Treasury requiring the Bank, for the purpose of ensuring compliance by the United Kingdom with its international obligations—

(a) to take specified action under this Part in respect of the resolution company, or

(b) not to take specified action under this Part in respect of the resolution company.

(3) A notice under subsection (1)—

(a) must be in writing, and

(b) may be withdrawn (generally, partially or conditionally).

(4) A notice may include requirements about timing.

Public funds: general

78

(1) The Bank of England may not exercise the power to make a mandatory reduction instrument or a stabilisation power in respect of a bank without the Treasury's consent if the exercise would be likely to have implications for public funds.

(2) In subsection (1)—

(a) “public funds” means the Consolidated Fund and any other account or source of money which cannot be drawn or spent other than by, or with the authority of, the Treasury, and

(b) action has implications for public funds if it would or might involve or lead to a need for the application of public funds.

(3) The Treasury may by order specify considerations which are to be, or not to be, taken into account in determining whether action has implications for public funds for the purpose of subsection (1).

(4) If the Treasury refuse consent under subsection (1), the Bank of England must consider other exercises of the power to make a mandatory reduction instrument or the stabilisation powers with a view to—

(a) pursuing the special resolution objectives, and

(b) avoiding the objections on which the Treasury's refusal was based.

(5) The Treasury may by notice to the Bank of England disapply subsection (4) in respect of a bank; and a notice may be revoked by further notice.

(6) An order under subsection (3)—

(a) shall be made by statutory instrument, and

(b) shall be subject to annulment in pursuance of a resolution of the House of Commons.

Public funds: bridge bank

79

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

(2) The Bank of England may not take action in respect of the resolution company without the Treasury's consent if the action would be likely to have implications for public funds.

(3) Section 78(2) and (3) have effect for the purposes of this section.

Bridge bank: report

80

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

(2) The first report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first transfer to the resolution company.

(3) A report must be made as soon as is reasonably practicable after the end of each subsequent year.

(4) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) or (3) before Parliament.

(5) The Bank must comply with any request of the Treasury for a report dealing with specified matters in relation to a resolution company.

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

(a) the content of the report;

(b) timing.

Temporary public ownership: report

81

(1) Where the Treasury make one or more share transfer orders under section 13(2) in respect of a bank, the Treasury must lay before Parliament a report about the activities of the bank.

(2) The first report must be made as soon as is reasonably practicable after the end of one year beginning with the date of the first share transfer order.

(3) A report must be made as soon as is reasonably practicable after the end of each subsequent year.

(4) The obligation to produce reports continues to apply in respect of each year until the first during which no securities issued by the bank are owned by—

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

(b) a nominee of the Treasury.

Groups

Temporary public ownership

82

(1) The Treasury may take a parent undertaking of a bank (the “holding company”) into temporary public ownership, in accordance with section 13(2), if the following conditions are met.

(2) Condition 1 is that the PRA is satisfied that the general conditions for the exercise of a stabilisation power set out in section 7 are met in respect of the bank.

(3) Condition 2 is that the Treasury are satisfied that it is necessary to take action in respect of the holding company for the purpose specified in Condition A or B of section 9.

(4) Condition 3 is that the holding company is an undertaking incorporated in, or formed under the law of any part of, the United Kingdom.

(5) Before determining whether Condition 2 is met the Treasury must consult—

(a) the PRA,

(aa) the FCA, and

(b) the Bank of England.

(6) Expressions used in this section have the same meaning as in the Companies Act 2006.

Supplemental

83

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

(a) section 10(1),

(aa) section 12ZA(2)(c),

(b) section 13(3),

(d) section 75(5)(a).

(2) Where the Treasury take a bank's holding company into temporary public ownership in reliance on section 82—

(a) section 20(2) applies to (i) directors of the holding company, (ii) directors of the bank, and (iii) directors of a bank in the same group,

(b) section 25(2) applies as if references to a bank were references to a holding company,

(d) a share transfer may be made in respect of securities which were issued by the bank or by another bank which is or was in the same group; and a transfer—

(i) shall be made by onward share transfer order under section 28 or by reverse share transfer order under section 29 (in addition to any that may be made under those sections as applied by paragraph (c) above),

(ii) may be made under section 28 only in respect of securities held by (or for the benefit of) the holding company or a subsidiary undertaking of the holding company,

(iii) is not subject to section 28(4), and

(iv) is not subject to the restriction in section 29(3) that the securities issued by the bank were transferred under the original order (as defined in section 29(1)).

(e) section 45 applies as if—

(i) the reference to a bank in subsection (1) were a reference to a holding company, and

(ii) a reference to the bank in subsection (3) were a reference to the holding company, the bank and any other bank which is or was in the same group,

(f) sections 65 to 68 apply, with—

(i) references to the bank or the transferred bank taken as references to the bank, the holding company and any other bank which is or was in the same group, and

(ii) references to securities of the bank taken as including references to securities of the holding company (so that, in particular, sections 65(1)(a)(ii) and 68(1)(a) include references to the earlier transfer of securities issued by the holding company),

(g) other provisions of this Act about share transfer orders apply with any necessary modifications,

(h) section 214B of the Financial Services and Markets Act 2000 applies (contribution to costs of special resolution regime...), and

(i) the reference in section 214B(1)(b) to the bank, and later references in the section, are treated as including references to any other bank which is also a subsidiary undertaking of the holding company (but not to the holding company itself).

(3) A reference in this Act or another enactment to a share transfer order in respect of securities issued by a bank includes (so far as the context permits) a reference to a share transfer order in respect of securities issued by a holding company.

(4) In so far as sections 47 and 60 apply in relation to orders treated as property transfer instruments by virtue of section 45(5)(b) or 46(5)(b) (including those sections as applied by virtue of subsection (2) above) the reference in section 47(1) to the property of a bank includes a reference to the property of a holding company and of any other bank which is or was in the same group.

(5) Expressions used in this section have the same meaning as in the Companies Act 2006.

(6) A reference to two banks being in the same group is a reference to their being group undertakings in respect of each other.

Building societies, &c.

Application of Part 1: general

84

This Part applies to building societies (within the meaning of section 119 of the Building Societies Act 1986) as it applies to banks, subject to—

(a) the provisions of the Table, and

(b) sections 84ZA to 84D (which relate to the second and fourth stabilisation options ).

Section	Topic	Modification or note
. . .	. . .	. . .
13	Temporary public ownership	The procedure provided by section 85 has effect in place of share transfer orders.
14 to 32	Transfer of securities	The procedure provided by section 85 has effect in place of share transfer orders; and—sections 28 and 30 do not apply, andsection 27 applies following an order under section 85 as following a share transfer order.
33	Property transfer instrument: nature	A property transfer instrument in respect of a building society may—cancel shares in the building society;confer rights and impose liabilities in place of cancelled shares (whether by way of actual or deemed shares in a transferee building society or by way of other rights and liabilities in relation to a transferee bank).
33 and 36	Property transfer instrument: continuity	A property transfer instrument in respect of a bank which provides for transfer to a building society may confer rights and impose liabilities by way of actual or deemed shares in the building society.
34	Property transfer instrument: effect	A property transfer instrument may, in particular, have effect without causing sections 93 to 102D of the Building Societies Act 1986 (mergers and transfers) to apply.
42	Supplemental property transfer instrument	A supplemental property transfer instrument in respect of a building society may—cancel shares in the building society;confer rights and impose liabilities in place of cancelled shares (whether by way of actual or deemed shares in a transferee building society or by way of other rights and liabilities in relation to a transferee bank).
45	Temporary public ownership: property transfer	aSection 45 applies following an order under section 85 as following a share transfer order.bA property transfer order in respect of a building society may cancel shares in the building society.
49 to 62	Compensation	aA reference to a share transfer order includes a reference to an order under section 85.bA resolution fund order may not be made under section 51(2)(b).cIf and in so far as an order under section 85 provides for the issue of new deferred shares, section 51(2) shall not apply but the Treasury may make a third party compensation order.
63 to 75	Incidental functions	A reference to a share transfer order includes a reference to an order under section 85.

Temporary public ownership

85

(1) For the purpose of exercising the fifth stabilisation option in respect of a building society the Treasury may make one or more orders for the purposes of—

(a) arranging for deferred shares of a building society to be publicly owned,

(b) cancelling private membership rights in the building society,

(d) eventually either winding up or dissolving the building society.

(2) For the purpose specified in subsection (1)(a) an order may—

(a) arrange for the transfer of existing deferred shares;

(b) provide for new deferred shares.

(3) For the purpose of arranging for the transfer of existing deferred shares an order may—

(a) provide for deferred shares to be transferred;

(b) make other provision for the purposes of, or in connection with, the transfer of deferred shares (whether or not the transfer has been or is to be effected by the order, by another order under this section or otherwise);

(4) For the purpose of providing for new deferred shares an order may—

(a) issue or allow the Treasury to issue new deferred shares on behalf of the building society;

(b) specify or allow the Treasury to specify the terms and effect of new deferred shares;

(5) For the purpose specified in subsection (1)(b) an order may—

(a) cancel or permit the cancellation of shares (whether or not deferred) in the building society;

(b) confer rights and impose liabilities, or allow them to be conferred and imposed, in place of cancelled shares;

(c) prevent the issue or acquisition of shares in or other rights in respect of the building society otherwise than in accordance with the order.

(6) For the purpose specified in subsection (1)(c) an order may make any provision which the Treasury think desirable to facilitate the business of the building society after the making of provision in accordance with subsections (3) to (5).

(7) An order in respect of a building society may—

(a) make provision expressly or impliedly disapplying or modifying the memorandum or rules of the building society;

(b) disapply or modify an enactment about, or in its application to, building societies.

(8) The following sections apply to orders under this section as to share transfer orders: sections 17, 18, 20, 21, ... , 23, 25, 48Z, 71, 73 and 83Z2.

Distribution of assets on dissolution or winding up

86

(1) The Treasury may by order make provision about the distribution of surplus assets of a building society which—

(a) is the subject of a property transfer instrument or order, and

(b) is later wound up or dissolved by consent.

(2) An order under section 85 may include provision about the distribution of surplus assets of the building society if it is later wound up or dissolved by consent.

(3) “Surplus” means remaining after the satisfaction of liabilities to creditors and shareholders.

(4) An order under or by virtue of this section—

(a) may include any provision of a kind that may be made by order under section 90B of the Building Societies Act 1986 (power to alter priorities on dissolution or winding up),

(b) may be made whether or not the power under that section has been exercised, and

Interpretation

87

(1) Expressions used in this group of sections and in the Building Societies Act 1986 have the same meaning in this group of sections as in that Act.

(2) An order under section 119(1) of that Act defining “deferred shares”—

(a) may make special provision for the meaning of that expression in the application of this group of sections, and

(b) shall otherwise apply to this group of sections as to that Act.

Consequential provision

88

(1) The Treasury may by order make provision, in addition to the provisions of this group of sections, in consequence of the application of this Part to building societies.

(2) An order may, in particular, amend or modify the effect of an enactment (including a fiscal enactment) passed before the commencement of this Part.

(3) 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.

Credit unions

89

(1) The Treasury may by order provide for the application of this Part to credit unions (within the meaning of section 31 of the Credit Unions Act 1979) subject to modifications set out in the order.

(2) An order may disapply, modify or apply (with or without modifications) any enactment which relates, or in so far as it relates, to credit unions.

(3) 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.

(4) Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to credit unions.

(5) In the application of this section to Northern Ireland the reference to section 31 of the Credit Unions Act 1979 is to be treated as a reference to Article 2 of the Credit Unions (Northern Ireland) Order 1985.

Part 2 — Bank Insolvency

Introduction

Overview

90

(1) This Part provides for a procedure to be known as bank insolvency.

(2) The main features of bank insolvency are that—

(a) a bank enters the process by court order,

(b) the order appoints a bank liquidator,

(c) the bank liquidator aims to arrange for the bank's eligible depositors to have their accounts transferred or to receive their compensation from the FSCS,

(d) the bank liquidator then winds up the bank, and

(e) for those purposes, the bank liquidator has powers and duties of liquidators, as applied and modified by the provisions of this Part.

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

Sections	Topic
Sections 90 to 93	Introduction
Sections 94 to 98	Bank insolvency order
Sections 99 to 105	Process of bank liquidation
Sections 106 to 112	Tenure of bank liquidator
Sections 113 to 116	Termination of process, &c.
Sections 117 to 122	Other processes
Sections 123 to 135	Miscellaneous

Interpretation: “bank”

91

(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

(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) 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.

(5) Section 130 makes provision for the application of this Part to building societies.

(6) Section 131 makes provision for the application of this Part to credit unions.

Interpretation: “the court”

92

In this Part “the court” means—

(a) in England and Wales, the High Court,

(b) in Scotland, the Court of Session, and

Interpretation: other expressions

93

(1) In this Part—

(a) “the PRA” means the Prudential Regulation Authority, and

(b) “the FCA” means the Financial Conduct Authority.

(2) In this Part a reference to “the FSCS” is a reference to—

(a) the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000), or

(b) where appropriate, the scheme manager of that Scheme.

(3) In this Part “eligible depositors” means depositors who are eligible for compensation under the FSCS.

(4) For the purposes of a reference in this Part to inability to pay debts—

(a) a bank that is in default on an obligation to pay a sum due and payable under an agreement, is to be treated as unable to pay its debts, and

(b) section 123 of the Insolvency Act 1986 (inability to pay debts) also applies; and

for the purposes of paragraph (a) “agreement” means an agreement the making or performance of which constitutes or is part of a regulated activity carried on by the bank.

(5) Expressions used in this Part and in the Insolvency Act 1986 have the same meaning as in that Act.

(6) Expressions used in this Part and in the Companies Act 2006 have the same meaning as in that Act.

(7) A reference in this Part to action includes a reference to inaction.

(8) The expression “fair” is used in this Part as a shorter modern equivalent of the expression “just and equitable” (and is not therefore intended to exclude the application of any judicial or other practice relating to the construction and application of that expression).

Bank insolvency order

The order

94

(1) A bank insolvency order is an order appointing a person as the bank liquidator of a bank.

(2) A person is eligible for appointment as a bank liquidator if qualified to act as an insolvency practitioner in relation to the bank.

(3) An appointment may be made only if the person has consented to act.

(4) A bank insolvency order takes effect in accordance with section 98; and—

(a) the process of a bank insolvency order having effect may be described as “bank insolvency” in relation to the bank, and

(b) while the order has effect the bank may be described as being “in bank insolvency”.

Application

95

(1) An application for a bank insolvency order may be made to the court by—

(a) the Bank of England,

(b) the PRA, or

(2) An application must nominate a person to be appointed as the bank liquidator.

(3) The bank must be given notice of an application, in accordance with rules under section 411 of the Insolvency Act 1986 (as applied by section 125 below).

Grounds for applying

96

(1) In this section—

(a) Ground A is that a bank is unable, or likely to become unable, to pay its debts,

(b) Ground B is that the winding up of a bank would be in the public interest, and

(2) The Bank of England may apply for a bank insolvency order only if—

(a) ... the PRA is satisfied that Condition 1 in section 7 is met, and

(b) the Bank of England is satisfied—

(ai) that Condition 2 in section 7 is met,

(i) that the bank has eligible depositors, and

(ii) that Ground A or C applies.

(3) The PRA may apply for a bank insolvency order only if—

(a) the Bank of England is satisfied that Condition 2 in section 7 is met, and

(b) the PRA is satisfied—

(i) that Condition 1 in section 7 is met,

(ii) that the bank has eligible depositors, and

(iii) that Ground A or C applies.

(4) The Secretary of State may apply for a bank insolvency order only if satisfied—

(a) that the bank has eligible depositors, and

(b) that Ground B applies.

(5) The sources of information on the basis of which the Secretary of State may be satisfied of the matters specified in subsection (4) include those listed in section 124A(1) of the Insolvency Act 1986 (petition for winding up on grounds of public interest).

Grounds for making

97

(1) The court may make a bank insolvency order on the application of the Bank of England or the PRA if satisfied—

(a) that the bank has eligible depositors, and

(b) that Ground A or C of section 96 applies.

(2) The court may make a bank insolvency order on the application of the Secretary of State if satisfied—

(a) that the bank has eligible depositors, and

(b) that Grounds B and C of section 96 apply.

(3) On an application for a bank insolvency order the court may—

(a) grant the application in accordance with subsection (1) or (2),

(b) adjourn the application (generally or to a specified date), or

Commencement

98

(1) A bank insolvency order shall be treated as having taken effect in accordance with this section.

(2) In the case where—

(a) notice has been given to the PRA under section 120 of an application for an administration order or a petition for a winding up order, and

(b) the PRA or the Bank of England applies for a bank insolvency order in the period of 2 weeks specified in Condition 3 in that section,

the bank insolvency order is treated as having taken effect when the application or petition was made or presented.

(3) In any other case, the bank insolvency order is treated as having taken effect when the application for the order was made.

(4) Unless the court directs otherwise on proof of fraud or mistake, proceedings taken in the bank insolvency, during the period for which it is treated as having had effect, are treated as having been taken validly.

Process of bank liquidation

Objectives

99

(1) A bank liquidator has two objectives.

(2) Objective 1 is to work with the FSCS so as to ensure that as soon as is reasonably practicable each eligible depositor—

(a) has the relevant account transferred to another financial institution, or

(b) receives payment from (or on behalf of) the FSCS.

(3) Objective 2 is to wind up the affairs of the bank so as to achieve the best result for the bank's creditors as a whole.

(4) Objective 1 takes precedence over Objective 2 (but the bank liquidator is obliged to begin working towards both objectives immediately upon appointment).

Liquidation committee

100

(1) Following a bank insolvency order a liquidation committee must be established, for the purpose of ensuring that the bank liquidator properly exercises the functions under this Part.

(2) The liquidation committee is to consist initially of—

(a) two individuals nominated by the Bank of England,

(b) one individual nominated by the PRA,

(d) one individual nominated by the FSCS.

(3) The bank liquidator must report to the liquidation committee about any matter—

(a) on request, or

(b) which the bank liquidator thinks is likely to be of interest to the liquidation committee.

(4) In particular, the bank liquidator—

(a) must keep the liquidation committee informed of progress towards Objective 1 in section 99, and

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Banking Act 2009

Compensation

Orders

49

Sale to private sector purchaser

50

Transfer to temporary public ownership

51

Transfer to bridge bank

52

Onward and reverse transfers

53

Independent valuer

54

Independent valuer: supplemental

55

Independent valuer: money

56

Valuation principles

57

Resolution fund

58

Third party compensation: discretionary provision

59

Third party compensation: mandatory provision

60

Sources of compensation

61

Procedure

62

Incidental functions

General continuity obligation: property transfers

63

Special continuity obligations: property transfers

64

Continuity obligations: onward property transfers

65

General continuity obligation: share transfers

66

Special continuity obligations: share transfers

67

Continuity obligations: onward share transfers

68

Continuity obligations: consideration and terms

69

Continuity obligations: termination

70

Pensions

71

Enforcement

72

Disputes

73

Tax

74

Power to change law

75

Treasury

International obligation notice: general

76

International obligation notice: bridge bank

77

Public funds: general

78

Public funds: bridge bank

79

Bridge bank: report

80

Temporary public ownership: report

81

Groups

Temporary public ownership

82

Supplemental

83

Building societies, &c.

Application of Part 1: general

84

Temporary public ownership

85