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| (1) | The Bank of England may exercise a stabilisation power in |
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| respect of a banking group company in accordance with section |
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| 12A(2) if the following conditions are met. |
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| (2) | Condition 1 is that the PRA is satisfied that the general conditions |
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| for the exercise of a stabilisation power set out in section 7 are |
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| met in respect of a bank in the same group. |
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| (3) | Condition 2 is that the Bank of England is satisfied that the |
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| exercise of the power in respect of the banking group company is |
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| necessary, having regard to the public interest in— |
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| (a) | the stability of the financial systems of the United |
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| (b) | the maintenance of public confidence in the stability of |
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| (c) | the protection of depositors, or |
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| (d) | the protection of any client assets that may be affected. |
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| (4) | Condition 3 is that the banking group company is an |
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| undertaking incorporated in, or formed under the law of any |
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| part of, the United Kingdom. |
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| (5) | Before determining whether Condition 2 is met, and if so how to |
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| react, the Bank of England must consult— |
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| (6) | In exercising a stabilisation power in reliance on this section the |
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| Bank of England must have regard to the need to minimise the |
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| effect of the exercise of the power on other undertakings in the |
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| (2) | After section 81C insert— |
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| “81CA | Section 81BA: supplemental |
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| (1) | This section applies where the Bank of England has power under |
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| section 81BA to exercise a stabilisation power in respect of a |
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| (2) | The provisions relating to the stabilisation powers and the bank |
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| administration procedure contained in this Act (except sections 7 |
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| and 8A) and any other enactment apply (with any necessary |
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| modifications) as if the banking group company were a bank. |
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| (3) | Where the banking group company mentioned in subsection (1) |
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| is a parent undertaking of the bank mentioned in section 81BA(2) |
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| (a) | the provisions in this Act relating to resolution |
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| instruments are to be read in accordance with the general |
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| rule in subsection (4), but |
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| (b) | that is subject to the modifications in subsection (5); |
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| | and provisions in this Act and any other enactment are to be read |
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| with any modifications that may be necessary as a result of |
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| (4) | The general rule is that the provisions in this Act relating to |
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| resolution instruments (including supplemental resolution |
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| instruments) are to be read (so far as the context permits)— |
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| (a) | as applying in relation to the bank as they apply in |
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| relation to the parent undertaking, and |
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| (b) | so, in particular, as allowing any provision that may be |
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| made in a resolution instrument in relation to the parent |
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| undertaking to be made (also or instead) in relation to the |
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| (5) | Where the banking group company mentioned in subsection (1) |
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| is a parent undertaking of the bank mentioned in section 81BA(2) |
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| (a) | section 41A (transfer of property subsequent to resolution |
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| instrument) applies as if the reference in subsection (2) to |
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| the bank were to the parent undertaking, the bank and |
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| any other bank which is or was in the same group; |
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| (b) | section 48V (onward transfer)— |
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| (i) | applies as if the references in subsection (3) to “the |
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| bank” included the bank, the parent undertaking |
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| and any other bank which is or was in the same |
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| group, and with the omission of subsection (4) of |
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| (ii) | is to be read as permitting the transfer of securities |
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| only if they are held by (or for the benefit of) the |
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| parent undertaking or a subsidiary company of |
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| (c) | section 48W (reverse transfer) applies as if the references |
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| in subsections (2) and (3) to “the bank” included the bank, |
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| the parent undertaking and any other bank which is or |
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| (6) | Where section 48B (special bail-in provision) applies in |
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| accordance with subsection (4) (so that section 48B applies in |
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| relation to the bank mentioned in section 81BA(2) as it applies in |
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| relation to the parent undertaking mentioned in subsection (3)), |
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| the provision that may be made in accordance with section |
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| 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes |
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| provision replacing a liability (of any form) of that bank with a |
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| security (of any form or class) of the parent undertaking. |
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| (7) | Where the banking group company mentioned in subsection (1) |
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| is a parent undertaking of the bank mentioned in section |
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| (a) | section 214B of the Financial Services and Markets Act |
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| 2000 (contribution to costs of special resolution regime) |
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| (b) | the reference in subsection (1)(b) of that section to the |
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| bank, and later references in that section, are treated as |
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| including references to any other bank which is a |
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| subsidiary undertaking of the parent undertaking (but |
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| not the parent undertaking itself).” |
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| (3) | In section 81D (interpretation: “banking group company” etc)— |
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| (a) | in subsection (6), for “, 81C” substitute “to 81CA”; |
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| (b) | in subsection (7) for “section 81B” substitute “sections 81B to |
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| Banks regulated by the Financial Conduct Authority |
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| 8 | In section 83A (modifications of Part 1 as it applies to banks not |
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| regulated by the Prudential Regulation Authority), in the table in |
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| subsection (2) insert the following entries at the appropriate places— |
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| | Subsection (3)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | a PRA-authorised person.” |
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| | Subsection (4)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | a PRA-authorised person.” |
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| | Subsection (6)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | a PRA-authorised person.” |
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| | Subsection (5)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | | | | | | Subsection (4)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | | | | | | Subsection (6)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | | | | | | Subsection (9)(a) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | a PRA-authorised person.” |
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| | Subsection (5)(b) does not |
| | | | | apply unless the bank has as a |
| | | | | member of its immediate group |
| | | | | a PRA-authorised person.” |
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| Recognised central counterparties |
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| 9 | In section 89B (application of Part 1 of the Act to recognised central |
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| (a) | in subsection (1), before paragraph (a) insert— |
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| (b) | after subsection (1) insert— |
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| “(1A) | The provisions relating to the third stabilisation option |
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| (bail-in) are to be disregarded in the application of this |
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| Part to recognised central counterparties.”; |
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| (c) | in subsection (2), in the substituted section 13(1), for “third” |
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| 10 | In section 120 (notice to Prudential Regulation Authority of preliminary |
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| steps to certain insolvency proceedings)— |
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| (a) | in subsection (7)(b)(ii), after “Part 1” insert “(and Condition 5 has |
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| been met, if applicable)”; |
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| (b) | after subsection (8) insert— |
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| (a) | applies only if a resolution instrument has been |
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| made under section 12A with respect to the bank |
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| in the 3 months ending with the date on which the |
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| PRA receives the notification under Condition 1, |
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| (b) | is that the Bank of England has informed the |
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| person who gave the notice that it consents to the |
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| insolvency procedure to which the notice relates |
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| (c) | in subsection (10), omit the “and” at the end of paragraph (b), and |
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| after paragraph (c) insert “, and |
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| (d) | if Condition 5 applies, the Bank of England must, |
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| within the period in Condition 3(a), inform the |
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| person who gave the notice whether or not it |
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| consents to the insolvency procedure to which the |
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| notice relates going ahead.”; |
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| (d) | after subsection (10) insert— |
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| “(11) | References in this section to the insolvency procedure to |
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| which the notice relates are to the procedure for the |
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| determination, resolution or appointment in question |
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| (see subsections (1) to (4)).” |
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| 11 | After section 256 insert— |
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| (1) | This section applies where— |
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| (a) | the Treasury are of the opinion that anything done, or |
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| proposed to be done, in connection with the exercise in |
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| relation to an institution of one or more of the |
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| stabilisation powers may constitute the granting of aid to |
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| which any of the provisions of Article 107 or 108 of the |
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| Treaty on the Functioning of the European Union applies |
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| (b) | section 145A (power to direct bank administrator) does |
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| (2) | The Treasury may, in writing, direct any bail-in administrator, or |
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| any director of the institution, to take specified action to enable |
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| the United Kingdom to pursue any of the purposes specified in |
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| subsection (3) of section 145A (read with subsection (9) of that |
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| (3) | Before giving a direction under this section the Treasury must |
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| consult the person to whom the direction is to be given. |
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| (4) | The person must comply with the direction within the period of |
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| time specified in the direction, or, if no period of time is specified, |
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| as soon as is reasonably practicable. |
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| (5) | A direction under this section is enforceable on an application |
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| made by the Treasury, by injunction or, in Scotland, by an order |
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| for specific performance under section 45 of the Court of Session |
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| (6) | A direction under this section may specify circumstances in |
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| which the person given the direction is immune from liability in |
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| (7) | Immunity by virtue of subsection (6) does not extend to action— |
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| (b) | in contravention of section 6(1) of the Human Rights Act |
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| (8) | Where a direction under this section is given to a director of the |
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| institution, the director is not to be regarded as failing to comply |
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| with any duty owed to any person (for example, a shareholder, |
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| creditor or employee of the institution) by virtue of any action in |
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| compliance with the direction.” |
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| Other amendments of the Act |
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| 12 (1) | Section 1 (overview) is amended as follows. |
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| (2) | In subsection (2)(a), for “three” substitute “four”. |
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| (3) | For subsection (3) substitute— |
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| “(3) | The four “stabilisation options” are— |
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| (a) | transfer to a private sector purchaser (section 11), |
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| (b) | transfer to a bridge bank (section 12), |
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| (c) | the bail-in option (section 12A), and |
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| (d) | transfer to temporary public ownership (section 13).” |
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| (a) | for “three” substitute “four”; |
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| (b) | before paragraph (a) insert— |
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| “(za) | the resolution instrument powers (sections 12A(2) |
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| (c) | in paragraph (b), after “33” insert “, 41A”. |
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| 13 | In section 13 (temporary public ownership), in subsection (1), for “third” |
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| 14 | In section 17 (share transfers: effect)— |
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| (a) | in subsection (1), after “order” insert, “or by a resolution |
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| (b) | in subsection (5), after “order” insert “or a resolution |
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| (c) | in subsection (6), after “order” insert “or a resolution |
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| 15 | In section 18 (share transfers: continuity), after subsection (5) insert— |
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| “(6) | This section applies to a resolution instrument as it applies to a |
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| share transfer instrument; and in relation to a resolution |
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| instrument references in this section to a “transfer” are to a |
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| transfer of securities (whether made by that or another resolution |
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| instrument) and “transferor” and “transferee” are to be read |
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| 16 | In section 44 (reverse property transfer)— |
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| (a) | in subsection (2), after “more” insert “bridge bank”; |
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| (b) | in subsection (3), after “more” insert “bridge bank”; |
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| (c) | in subsection (4), for “A reverse” substitute “A bridge bank |
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| (i) | after “make a” insert “bridge bank”, and |
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| (ii) | in paragraph (b), for “the reverse” substitute “the bridge |
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| (e) | in subsection (5), for “a reverse” substitute “a bridge bank |
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| (f) | in subsection (6), for “a reverse” substitute “a bridge bank |
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| (g) | in subsection (7), for “a reverse” substitute “a bridge bank |
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| (h) | in the heading, for “Reverse” substitute “Bridge bank: reverse”. |
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| 17 | In section 63 (general continuity obligation: property transfers), in |
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| subsection (1)(a), for “or 12(2)” substitute “, 12(2) or 41A(2)”. |
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| 18 | In section 66 (general continuity obligation: share transfers)— |
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| (a) | in subsection (1)(a), after “13(2)” insert “, or which falls within |
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| (b) | in subsection (1)(d)(i), after “11(2)(a)” insert “, or in a case falling |
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| (c) | after subsection (1) insert— |
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| “(1A) | A bank falls within this subsection if a resolution |
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| instrument (or supplemental resolution instrument) has |
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| changed the ownership of the bank (wholly or partly) by |
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| providing for the transfer, cancellation or conversion |
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| from one form or class to another of securities issued by |
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| the bank (and the reference in subsection (1)(b) to “the |
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| transfer” includes such a cancellation or conversion).” |
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| 19 | In section 67 (special continuity obligation: share transfers), in |
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| subsection (4)(c), after “order” insert “or resolution instrument”. |
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| 20 | In section 68 (continuity obligations: onward share transfers), in |
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| subsection (1)(a), after “transferred by” insert “a resolution instrument |
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| under section 12A(2) or supplemental resolution instrument under |
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| 21 | In section 71 (pensions), in subsection (1)— |
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| (a) | omit the “and” at the end of paragraph (b); |
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| (b) | after paragraph (c) insert “, and |
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| (d) | resolution instruments.” |
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| 22 | In section 72 (enforcement), in subsection (1)— |
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| (a) | omit the “or” at the end of paragraph (b); |
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| (b) | after paragraph (c) insert “, or |
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| (d) | a resolution instrument.” |
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| 23 | In section 73 (disputes), in subsection (1)— |
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| (a) | omit the “and” at the end of paragraph (b); |
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| (b) | after paragraph (c) insert “, and |
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| (d) | resolution instruments.” |
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| 24 | In section 74 (tax), in subsection (6), for “or 45” substitute “, 45, 48U or |
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| 25 | After section 80 insert— |
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| “80A | Transfer for bail-in purposes: report |
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| (1) | This section applies where the Bank of England makes one or |
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| more resolution instruments under section 12A(2) in respect of a |
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| (2) | The Bank of England must, on request by the Treasury, report to |
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| the Chancellor of the Exchequer about— |
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| (a) | the exercise of the power to make a resolution instrument |
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| (b) | the activities of the bank, and |
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| (c) | any other matters in relation to the bank that the Treasury |
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| (3) | In relation to the matters in subsection (2)(a) and (b), the report |
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| must comply with any requirements that the Treasury may |
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| (4) | The Chancellor of the Exchequer must lay a copy of each report |
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| under subsection (2) before Parliament.” |
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| 26 | In section 81A (accounting information to be included in reports under |
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| (a) | in subsection (1), for “or 81” substitute “, 80A(2)(b) or 81”; |
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| (b) | in the heading, for “and 81” substitute “, 80A(2)(b) and 81”. |
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