142.107-113

House of Commons

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Lords Amendments to the Financial Services (Banking Reform) Bill

107

48L
Powers in relation to securities

(1)
A resolution instrument may—

(a)
cancel or modify any securities to which this subsection

applies;

(b)
convert any such securities from one form or class into

another.

(2)
Subsection (1) applies to securities issued by the bank that fall

within Class 1 in section 14.

(3)
A resolution instrument may—

(a)
make provision with respect to rights attaching to

securities issued by the bank;

(b)
provide for the listing of securities issued by the bank to

be discontinued.

(4)
The reference in subsection (1)(b) to converting securities from

one form or class into another includes creating a new security in

connection with the modification of an existing security.

(5)
The provision that may be made under subsection (3)(a)

includes, for example—

(a)
provision that specified rights attaching to securities are

to be treated as having been exercised;

(b)
provision that the Bank of England, or a bail-in

administrator, is to be treated as authorised to exercise

specified rights attaching to securities;

(c)
provision that specified rights attaching to securities may

not be exercised for a period specified in the instrument.

(6)
In subsection (3)(b) the reference to “listing” is to listing under

section 74 of the Financial Services and Markets Act 2000.

(7)
The provision that may be made under this section in relation to

any securities is in addition to any provision that the Bank of

England may have power to make in relation to them under

section 48B.

48M
Termination rights, etc

(1)
In this section “default event provision” has the same meaning as

in section 22.

(2)
A resolution instrument may provide for subsection (3) or (4) to

apply (but need not apply either).

(3)
If this subsection applies, the resolution instrument is to be

disregarded in determining whether a default event provision

applies.

(4)
If this subsection applies, the resolution instrument is to be

disregarded in determining whether a default event provision

applies except so far as the instrument provides otherwise.

(5)
In subsections (3) and (4) a reference to the resolution instrument

is a reference to—

(a)
the making of the instrument,

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(b)
anything that is done by the instrument or is to be, or may

be, done under or by virtue of the instrument, and

(c)
any action or decision taken or made under this or

another enactment in so far as it resulted in, or was

connected to, the making of the instrument.

(6)
Provision under subsection (2) may apply subsection (3) or (4)—

(a)
generally or only for specified purposes, cases or

circumstances, or

(b)
differently for different purposes, cases or circumstances.

(7)
A thing is not done by virtue of a resolution instrument for the

purposes of subsection (5)(b) merely by virtue of being done

under a contract or other agreement rights or obligations under

which have been affected by the instrument.

48N
Directors

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

(a)
to remove a director of a specified bank;

(b)
to vary the service contract of a director of a specified

bank;

(c)
to terminate the service contract of a director of a

specified bank;

(d)
to appoint a director of a specified bank.

(2)
Subsection (1) also applies to a director of any undertaking which

is a banking group company in respect of a specified bank.

(3)
Appointments under subsection (1)(d) are to be on terms and

conditions agreed with the Bank of England.

48O
Directions in or under resolution instrument

(1)
A resolution instrument may—

(a)
require one or more directors of the bank to comply with

any general or specific directions that may be set out in

the instrument;

(b)
enable the Bank of England to give written directions

(whether general or specific) to one or more directors of

the bank.

(2)
A director—

(a)
is not to be regarded as failing to comply with any duty

owed to any person (for example, a shareholder, creditor

or employee of the bank) by virtue of any action or

inaction in compliance with a direction given under

subsection (1)(a) or (b);

(b)
is to be immune from liability in damages in respect of

action or inaction in accordance with a direction.

(3)
A director must comply with a direction within the period of

time specified in the direction, or if no period of time is specified,

as soon as reasonably practicable.

(4)
A direction under subsection (1)(a) or (b) is enforceable on an

application made by the Bank of England, by injunction or, in

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Scotland, by an order for specific performance under section 45

of the Court of Session Act 1988.

48P
Orders for safeguarding certain financial arrangements

(1)
In this section “protected arrangements” means security

interests, title transfer collateral arrangements, set-off

arrangements and netting arrangements.

(2)
In subsection (1)—

“netting arrangements” means arrangements under which a

number of claims or obligations can be converted into a

net claim or obligation, and includes, in particular, “close-

out” netting arrangements, under which actual or

theoretical debts are calculated during the course of a

contract for the purpose of enabling them to be set off

against each other or to be converted into a net debt;

“security interests” means arrangements under which one

person acquires, by way of security, an actual or

contingent interest in the property of another;

“set-off arrangements” means arrangements under which

two or more debts, claims or obligations can be set off

against each other;

“title transfer collateral arrangements” means arrangements

under which Person 1 transfers assets to Person 2 on

terms providing for Person 2 to transfer assets if specified

obligations are discharged.

(3)
The Treasury may by order—

(a)
restrict the exercise of any power within the scope of this

paragraph in cases that involve, or where the exercise of

the power might affect, protected arrangements;

(b)
impose conditions on the exercise of any power within

the scope of this paragraph in cases that involve, or where

the exercise of the power might affect, protected

arrangements;

(c)
require any instrument that makes special bail-in

provision to include specified provision, or provision to a

specified effect, in respect of or for purposes connected

with protected arrangements;

(d)
provide for an instrument to be void or voidable, or for

other consequences to arise, if or in so far as the

instrument is made or purported to be made in

contravention of a provision of the order (or of another

order under this section);

(e)
specify principles to which the Bank of England is to be

required to have regard in exercising specified powers—

(i)
that involve protected arrangements, or

(ii)
where the exercise of the powers might affect

protected arrangements.

(4)
References to exercising a power within the scope of paragraph

(a) or (b) of subsection (3) are to making an instrument containing

provision made in reliance on section 12A(3)(a) or 44B (special

bail-in provision).

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(5)
An order may apply to protected arrangements generally or only

to arrangements—

(a)
of a specified kind, or

(b)
made or applying in specified circumstances.

(6)
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.

(7)
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;

(c)
wholly or partly arise automatically as a matter of law;

(d)
involve any number of parties;

(e)
operate partly by reference to other arrangements

between parties.

(8)
An order—

(a)
is 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.

48Q
Continuity

(1)
A resolution instrument may provide for anything (including

legal proceedings) that relates to anything affected by the

instrument and is in the process of being done immediately

before the instrument takes effect to be continued from the time

the instrument takes effect.

(2)
A resolution instrument may modify references (express or

implied) in an instrument or document.

(3)
A resolution instrument may require or permit any person to

provide information and assistance to the Bank of England or

another person, for the purposes of or in connection with

provision made or to be made in that or another resolution

instrument.

48R
Execution and registration of instruments etc

(1)
A resolution instrument may permit or require the execution,

issue or delivery of an instrument.

(2)
A resolution instrument may provide for any provision in the

instrument to have effect irrespective of—

(a)
whether an instrument has been produced, delivered,

transferred or otherwise dealt with;

(b)
registration.

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(3)
A resolution instrument may provide for the effect of an

instrument executed, issued or delivered in accordance with the

resolution instrument.

(4)
A resolution instrument may—

(a)
entitle a person to be registered in respect of a security;

(b)
require a person to effect registration.

48S
Resolution instruments: general matters

(1)
Provision made in a resolution instrument takes effect despite

any restriction arising by virtue of contract or legislation or in

any other way.

(2)
A resolution instrument may include incidental, consequential

or transitional provision.

(3)
In relying on subsection (2) a resolution instrument—

(a)
may make provision generally or only for specified

purposes, cases or circumstances, and

(b)
may make different provision for different purposes,

cases or circumstances.

48T
Procedure

(1)
As soon as is reasonably practicable after making a resolution

instrument in respect of a bank the Bank of England must send a

copy to—

(a)
the bank,

(b)
the Treasury,

(c)
the PRA,

(d)
the FCA, and

(e)
any other person specified in the code of practice under

section 5.

(2)
As soon as is reasonably practicable after making a resolution

instrument the Bank of England must publish a copy—

(a)
on the Bank’s internet website, and

(b)
in two newspapers, chosen by the Bank of England to

maximise the likelihood of the instrument coming to the

attention of persons likely to be affected.

(3)
Where the Treasury receive a copy of a resolution instrument

under subsection (1) they must lay a copy before Parliament.

48U
Supplemental resolution instruments

(1)
This section applies where the Bank of England has made a

resolution instrument (“the original instrument”) with respect to

a bank.

(2)
The Bank of England may make, with respect to the bank, one or

more resolution instruments designated by the Bank of England

as supplemental resolution instruments.

(3)
Sections 7 and 8A do not apply to a supplemental resolution

instrument (but it is to be treated in the same way as a resolution

instrument for all other purposes, including for the purposes of

the application of a power under this Part).

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(4)
Before making a supplemental resolution instrument the Bank of

England must consult—

(a)
the PRA,

(b)
the FCA, and

(c)
the Treasury.

(5)
The possibility of making a supplemental resolution instrument

in reliance on subsection (2) is without prejudice to the possibility

of making a new instrument in accordance with section 12A(2)

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

48V
Onward transfer

(1)
This section applies where the Bank of England has made a

resolution instrument (“the original instrument”) providing for

securities issued by a specified bank to be transferred to any

person.

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

resolution instruments.

(3)
An onward transfer resolution instrument is a resolution

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

resolution 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 instrument or otherwise).

(4)
An onward transfer resolution instrument may not transfer

securities to the transferor under the original instrument.

(5)
Sections 7 and 8A do not apply to an onward transfer resolution

instrument (but it is to be treated in the same way as any other

resolution instrument for all other purposes, including for the

purposes of the application of a power under this Part).

(6)
Before making an onward transfer resolution instrument the

Bank of England must consult—

(a)
the PRA,

(b)
the FCA, and

(c)
the Treasury.

(7)
Section 48U applies where the Bank of England has made an

onward transfer resolution instrument.

48W
Reverse transfer

(1)
This section applies where the Bank of England has made an

instrument (“the original instrument”) that is either—

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(a)
a resolution instrument providing for the transfer of

securities issued by a bank to a person (“the transferee”),

or

(b)
an onward transfer resolution instrument (see section

48V) providing for the transfer of securities issued by a

bank to a person (“the onward transferee”).

(2)
In a case falling within subsection (1)(a) the Bank of England may

make one or more reverse transfer resolution instruments in

respect of securities issued by the bank and held by the transferee

(whether or not they were transferred by the original

instrument).

(3)
In a case falling within subsection (1)(b), the Bank of England

may make one or more reverse transfer resolution instruments in

respect of securities issued by the bank and held by the onward

transferee.

(4)
A reverse transfer resolution instrument is a resolution

instrument which—

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

instrument;

(b)
makes other provision for the purposes of, or in

connection with, the transfer of securities which are, or

could be or could have been, transferred under

paragraph (a).

(5)
Except where subsection (6) applies, the Bank of England may

make a reverse transfer resolution instrument under subsection

(2) only with the written consent of the transferee.

(6)
This subsection applies where the transferee is—

(a)
a bail-in administrator, or

(b)
a person who is not to be authorised to exercise any rights

attaching to the securities except on the Bank of

England’s instructions.

(7)
The Bank of England may make a reverse transfer resolution

instrument under subsection (3) only with the written consent of

the onward transferee.

(8)
Sections 7 and 8A do not apply to a reverse transfer resolution

instrument (but it is to be treated in the same way as any other

resolution instrument for all other purposes including for the

purposes of an application of a power under this Part).

(9)
Before making a reverse transfer resolution instrument the Bank

of England must consult—

(a)
the PRA,

(b)
the FCA, and

(c)
the Treasury.

(10)
Section 48U applies where the Bank of England has made a

reverse transfer resolution instrument.”

Transfers of property

5    (1)
After section 41 insert—