Financial Services (Banking Reform) Bill (HL Bill 54)

12 In section 112A (rights to terminate etc.), in subsection (1), for “or a banking
business transfer scheme” substitute “, a banking business transfer scheme
or a ring-fencing transfer scheme”.

13 In Schedule 12 (transfer schemes: certificates) after Part 2A insert—

5“ Part 2B Ring-fencing transfer schemes

9B Appropriate certificates

(1) For the purposes of section 111(2) the appropriate certificates, in
relation to a ring-fencing transfer scheme, are—

(a) 10a certificate given by the PRA certifying its approval of the
application,

(b) a certificate under paragraph 9C, and

(c) if sub-paragraph (2) applies, a certificate under paragraph
9D.

(2) 15This sub-paragraph applies if the transferee is an EEA firm falling
within paragraph 5(a) or (b) of Schedule 3.

9C Certificate as to financial resources

(1) A certificate under this paragraph is one given by the relevant
authority and certifying that, taking the proposed transfer into
20account, the transferee possesses, or will possess before the
scheme takes effect, adequate financial resources.

(2) “Relevant authority” means—

(a) if the transferee is a PRA-authorised person with a Part 4A
permission or with permission under Schedule 4, the PRA;

(b) 25if the transferee is an EEA firm falling within paragraph
5(a) or (b) of Schedule 3, its home state regulator;

(c) if the transferee does not fall within paragraph (a) or (b)
but is subject to regulation in a country or territory outside
the United Kingdom, the authority responsible for the
30supervision of the transferee’s business in the place in
which the transferee has its head office;

(d) in any other case, the FCA.

(3) In sub-paragraph (2), any reference to a transferee of a particular
description includes a reference to a transferee who will be of that
35description if the proposed ring-fencing transfer scheme takes
effect.

9D Certificate as to consent of home state regulator

A certificate under this paragraph is one given by the appropriate
regulator and certifying that the home state regulator of the
40transferee has been notified of the proposed scheme and that—

(a) the home state regulator has responded to the notification,
or

(b) the period of 3 months beginning with the notification has
elapsed.”

Section 13

SCHEDULE 2 Bail-in stabilisation option

5Part 1 Amendments of Banking Act 2009

1 The Banking Act 2009 is amended as follows.

New stabilisation option: bail-in

2 After section 12 insert—

“12A 10Bail-in option

(1) The third stabilisation option is exercised by the use of the power in
subsection (2).

(2) The Bank of England may make one or more resolution instruments
(which may contain provision or proposals of any kind mentioned in
15subsections (3) to (6)).

(3) A resolution instrument may—

(a) make special bail-in provision with respect to a specified
bank;

(b) make other provision for the purposes of, or in connection
20with, any special bail-in provision made by that or another
instrument.

(4) A resolution instrument may—

(a) provide for securities issued by a specified bank to be
transferred to a bail-in administrator (see section 12B) or
25another person;

(b) make other provision for the purposes of, or in connection
with, the transfer of securities issued by a specified bank
(whether or not the transfer has been or is to be effected by
that instrument, by another resolution instrument or
30otherwise).

(5) A resolution instrument may set out proposals with regard to the
future ownership of a specified bank or of the business of a specified
bank, and any other proposals (for example, proposals about making
special bail-in provision) that the Bank of England may think
35appropriate.

(6) A resolution instrument may make any other provision the Bank of
England may think it appropriate to make in exercise of specific
powers under this Part.

(7) Provision made in accordance with subsection (4) may relate to—

(a) 40specified securities, or

(b) securities of a specified description.

(8) Where the Bank of England has exercised the power in subsection (4)
to transfer securities to a bail-in administrator, the Bank of England
must exercise its functions under this Part (see, in particular, section
548V) with a view to ensuring that any securities held by a person in
the capacity of a bail-in administrator are so held only for so long as
is, in the Bank of England’s opinion, appropriate having regard to
the special resolution objectives.

(9) References in this Part to “special bail-in provision” are to provision
10made in reliance on section 48B.

12B Bail-in administrators

(1) The Bank of England may, in a resolution instrument, appoint an
individual or body corporate as a bail-in administrator.

(2) A bail-in administrator is appointed—

(a) 15to hold any securities that may be transferred or issued to
that person in the capacity of bail-in administrator;

(b) to perform any other functions that may be conferred under
any provision of this Part.

(3) The Bank of England may appoint more than one bail-in
20administrator to perform functions in relation to a bank (but no more
than one of them may at any one time be authorised to hold securities
as mentioned in subsection (2)(a)).

(4) Securities held by a bail-in administrator (in that capacity, and
whether as a result of a resolution instrument or otherwise) are to be
25held in accordance with the terms of a resolution instrument that
transfers those, or other, securities to the bail-in administrator.

(5) For example, the following provision may be made by virtue of
subsection (4)—

(a) provision that specified rights of a bail-in administrator with
30respect to all or any of the securities are to be exercisable only
as directed by the Bank of England;

(b) provision specifying rights or obligations that the bail-in
administrator is, or is not, to have in relation to some or all of
the securities.

(6) 35A bail-in administrator must have regard, in performing any
functions of the office, to any objectives that may be specified in a
resolution instrument.

(7) Where one or more objectives are specified in accordance with
subsection (6), the objectives are to be taken to have equal status with
40each other, unless the contrary is stated in the resolution instrument.

(8) See sections 48I to 48K for further provision about bail-in
administrators.”

3 After section 8 insert—

“8A Specific condition: bail-in

(1) The Bank of England may exercise a stabilisation power in respect of
a bank in accordance with section 12A(2) only if satisfied that the
5condition in subsection (2) is met.

(2) The condition is that the exercise of the power is necessary, having
regard to the public interest in—

(a) the stability of the financial systems of the United Kingdom,

(b) the maintenance of public confidence in the stability of those
10systems,

(c) the protection of depositors, or

(d) the protection of any client assets that may be affected.

(3) Before determining whether that condition is met, and if so how to
react, the Bank of England must consult—

(a) 15the PRA,

(b) the FCA, and

(c) the Treasury.

(4) The condition in this section is in addition to the conditions in section
7.”

20Further provision about the bail-in option

4 After section 48A insert—

“Bail-in option

48B Special bail-in provision

(1) “Special bail-in provision”, in relation to a bank, means any of the
25following (or any combination of the following)—

(a) provision cancelling a liability owed by the bank;

(b) provision modifying, or changing the form of, a liability
owed by the bank;

(c) provision that a contract under which the bank has a liability
30is to have effect as if a specified right had been exercised
under it.

(2) A power to make special bail-in provision—

(a) may be exercised only for the purpose of, or in connection
with, reducing, deferring or cancelling a liability of the bank;

(b) 35may not be exercised so as to affect any excluded liability.

(3) The following rules apply to the interpretation of subsection (1).

1. The reference to cancelling a liability owed by the bank includes a
reference to cancelling a contract under which the bank has a
liability.

2. The reference to modifying a liability owed by the bank includes a
reference to modifying the terms (or the effect of the terms) of a
contract under which the bank has a liability.

3. The reference to changing the form of a liability owed by the bank,
5includes, for example—

• converting an instrument under which the bank owes a
  liability from one form or class to another,

• replacing such an instrument with another instrument of a
  different form or class, or

• 10creating a new security (of any form or class) in connection
  with the modification of such an instrument.

(4) Examples of special bail-in provision include—

(a) provision that transactions or events of any specified kind
have or do not have (directly or indirectly) specified
15consequences or are to be treated in a specified manner for
specified purposes;

(b) provision discharging persons from further performance of
obligations under a contract and dealing with the
consequences of persons being so discharged.

(5) 20The form and class of the instrument (“the resulting instrument”)
into which an instrument is converted, or with which it is replaced,
do not matter for the purposes of paragraphs (a) and (b) of rule 3 in
subsection (3); for instance, the resulting instrument may (if it is a
security) fall within Class 1 or any other Class in section 14.

(6) 25The following liabilities of the bank are “excluded liabilities”—

(a) liabilities representing protected deposits;

(b) any liability, so far as it is secured;

(c) liabilities that the bank has by virtue of holding client assets;

(d) liabilities with an original maturity of less than 7 days owed
30by the bank to a credit institution or investment firm;

(e) liabilities arising from participation in designated settlement
systems and owed to such systems or to operators of, or
participants in, such systems;

(f) liabilities owed to central counterparties recognised by the
35European Securities and Markets Authority in accordance
with Article 25 of Regulation (EU) 648/2012 of the European
Parliament and the Council;

(g) liabilities owed to an employee or former employee in
relation to salary or other remuneration, except variable
40remuneration;

(h) liabilities owed to an employee or former employee in
relation to rights under a pension scheme, except rights to
discretionary benefits;

(i) liabilities owed to creditors arising from the provision to the
45bank of goods or services (other than financial services) that
are critical to the daily functioning of the bank’s operations.

(7) The following special rules apply in cases involving banking group
companies—

(a) a liability mentioned in subsection (6)(d) is not an excluded
liability if the credit institution or investment firm to which
5the liability is owed is a banking group company in relation
to the bank (see section 81D);

(b) in subsection (6)(i) the reference to creditors does not include
companies which are banking group companies in relation to
the bank.

48C 10Meaning of “protected deposit”

(1) A deposit is “protected” so far as it is covered by the Financial
Services Compensation Scheme.

(2) A deposit is “protected” so far as it is covered by a scheme which—

(a) operates outside the United Kingdom, and

(b) 15is comparable to the Financial Services Compensation
Scheme.

(3) If one or both of subsections (1) and (2) apply to a deposit, the
amount of the deposit “protected” is the highest amount which
results from either of those subsections.

(4) 20In subsections (1) and (2) and section 48B(6)(a), “deposit” has the
meaning given by article 5(2) of the Financial Services and Markets
Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544S.I. 2001/544), but
ignoring the exclusions in article 6.

48D General interpretation of section 48B

(1) 25In section 48B—

• “client assets” means assets which the bank has undertaken to
  hold on trust for, or on behalf of, a client;

• “contract” includes any instrument;

• “credit institution” means any credit institution as defined in
  30Article 4.1(1) of Regulation (EU) No 575/2013 of the
  European Parliament and of the Council, other than an entity
  mentioned in Article 2.5(2) to (23) of Directive 2013/36/EU of
  the European Parliament and of the Council;

• “designated settlement system” means a system designated in
  35accordance with Directive 98/26/EC of the European
  Parliament and of the Council (as amended by Directives
  2009/44/EC and 2010/78/EU);

• “employee” includes the holder of an office;

• “investment firm” means an investment firm as defined in
  40Article 4.1(2) of Regulation (EU) No 575/2013 of the
  European Parliament and of the Council that is subject to the
  initial capital requirement specified in Article 28(2) of
  Directive 2013/36/EU of the European Parliament and of the
  Council;

• 45“pension scheme” includes any arrangement for the payment of
  pensions, allowances and gratuities;

• “secured” means secured against property or rights, or
  otherwise covered by collateral arrangements.

(2) In subsection (1)—

• “assets” has the same meaning as in section 232(4) (ignoring for
  these purposes section 232(5A)(b));

• “collateral arrangements” includes arrangements which are title
  5transfer collateral arrangements for the purposes of section
  48.

(3) For the purposes of section 48B(6)(h), a benefit under a pension
scheme is discretionary so far as the employee’s right to the benefit
was a result of the exercise of a discretion.

48E 10Report on special bail-in provision

(1) This section applies where the Bank of England makes a resolution
instrument containing special bail-in provision (see section 48B(1)).

(2) The Bank of England must report to the Chancellor of the Exchequer
stating the reasons why that provision has been made in the case of
15the liabilities concerned.

(3) If the provision departs from the insolvency treatment principles, the
report must state the reasons why it does so.

(4) The insolvency treatment principles are that where an instrument
includes special bail-in provision—

(a) 20the provision made by the instrument must be consistent
with treating all the liabilities of the bank in accordance with
the priority they would enjoy on a liquidation, and

(b) any creditors who would have equal priority on a liquidation
are to bear losses on an equal footing with each other.

(5) 25A report must comply with any other requirements as to content that
may be specified by the Treasury.

(6) A report must be made as soon as reasonably practicable after the
making of the resolution instrument to which it relates.

(7) The Chancellor of the Exchequer must lay a copy of each report
30under subsection (2) before Parliament.

48F Power to amend definition of “excluded liabilities”

(1) The Treasury may by order amend section 48B(6) by—

(a) adding to the list of excluded liabilities;

(b) amending or omitting any paragraph of that subsection,
35other than paragraphs (a) to (c).

(2)
The Treasury may by order amend section 48C or 48D.

(3) The powers conferred by subsections (1) and (2) include power to
make consequential and transitional provision.

(4) An order under this section—

(a) 40must 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) The Treasury must consult before laying a draft order under this
section before Parliament.

48G 45Priority between creditors

(1) The Treasury may, for the purpose of ensuring that the treatment of
liabilities in any instrument that contains special bail-in provision is
aligned to an appropriate degree with the treatment of liabilities on
an insolvency, by order specify matters or principles to which the
50Bank of England is to be required to have regard in making any such
instrument.

(2) An order may, for example, specify the insolvency treatment
principles (as defined in section 48E(4)) or alternative principles.

(3) An order may specify the meaning of “insolvency” for one or more
55purposes of the order.

(4) An order may amend sections 44C(4) and 48E(4).

(5) An order —

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

(b) may not be made unless a draft has been laid before and
60approved by resolution of each House of Parliament.

48H Business reorganisation plans

(1) A resolution instrument may require a bail-in administrator, or one
or more directors of the bank, to—

(a) draw up a business reorganisation plan with respect to the
65bank, and

(b) submit it to the Bank of England within the period allowed by
(or under) the instrument.

(2) “Business reorganisation plan” means a plan that includes—

(a) an assessment of the factors that caused Condition 1 in
70section 7 to be met in the case of the bank,

(b) a description of the measures to be adopted with a view to
restoring the viability of the bank, and

(c) a timetable for the implementation of those measures.

(3) Where a person has submitted a business reorganisation plan to the
75Bank of England under subsection (1) (or has re-submitted a plan
under subsection (4)), the Bank of England—

(a) must approve the plan if satisfied that the plan is
appropriately designed for meeting the objective mentioned
in subsection (2)(b);

(b) 80must otherwise require the person to amend the plan in a
specified manner.

(4) Where the Bank of England has required a person to amend a
business re-organisation plan, the person must re-submit the
amended plan within the period allowed by (or under) the resolution
85instrument.

(5) Before deciding what action to take under subsection (3) the Bank of
England must (for each submission or re-submission of a plan)
consult—

(a) the PRA, and

(b) 90the FCA.

(6) A business reorganisation plan may include recommendations by
the person submitting the plan as to the exercise by the Bank of
England of any of its powers under this Part in relation to the bank.

(7) Where a resolution instrument contains provision under subsection
5(1), the instrument may—

(a) specify further matters (in addition to those mentioned in
subsection (2)) that must be dealt with in the business
reorganisation plan;

(b) make provision about the timing of actions to be taken in
10connection with the making and approval of the plan;

(c) enable any provision that the Bank of England has power
under paragraph (a) or (b) to make in the instrument to be
made instead in an agreement between the Bank of England
and the bail-in administrator.

(8) 15For the purposes of subsection (2)(b) the viability of a bank is to be
assessed by reference to whether the bank satisfies, and (if so) for
how long it may be expected to continue to satisfy, the threshold
conditions (as defined in section 55B of the Financial Services and
Markets Act 2000).

48I 20Bail-in administrator: further functions

(1) A resolution instrument may—

(a) authorise a bail-in administrator to manage the bank’s
business (or confer on a bail-in administrator any other
power with respect to the management of the bank’s
25business);

(b) authorise a bail-in administrator to exercise any other powers
of the bank;

(c) confer on a bail-in administrator any other power the Bank of
England may consider appropriate;

(d) 30provide that the exercise of any power conferred by the
instrument in accordance with this section is to be subject to
conditions specified in the instrument.

(2) A resolution instrument may require a bail-in administrator to make
reports to the Bank of England—

(a) 35on any matter specified in the instrument, and

(b) at the times or intervals specified in the instrument.

(3) If a resolution instrument specifies a matter in accordance with
subsection (2)(a), it may provide for further requirements as to the
contents of the report on that matter to be specified in an agreement
40between the Bank of England and the bail-in administrator.

(4) A resolution instrument may—

(a) require a bail-in administrator to consult specified persons
before exercising specified functions (and may specify
particular matters on which the specified person must be
45consulted);

(b) provide that a bail-in administrator is not to exercise
specified functions without the consent of a specified person.

48J Bail-in administrator: supplementary

(1) A bail-in administrator may do anything necessary or desirable for
50the purposes of or in connection with the performance of the
functions of the office.

(2) A bail-in administrator is not a servant or agent of the Crown (and,
in particular, is not a civil servant).

(3) Where a bail-in administrator is appointed under this Part, the Bank
55of England—

(a) must make provision in a resolution instrument for
resignation and replacement of the bail-in administrator;

(b) may remove the bail-in administrator from office only (i) on
the ground of incapacity or misconduct, or (ii) on the ground
60that there is no further need for a person to perform the
functions conferred on the bail-in administrator.

48K Bail-in administrator: money

(1) A resolution instrument may provide for the payment of
remuneration and allowances to a bail-in administrator.

(2) 65Provision made under subsection (1) may provide that the amounts
are—

(a) to be paid by the Bank of England, or

(b) to be determined by the Bank of England and paid by the
bank.

(3) 70A bail-in administrator is 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).

48L Powers in relation to securities

(1) 75A 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) 80Subsection (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) 85provide 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) 90The 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
5specified 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) 10The 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
15section 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
20applies.

(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
25a reference to—

(a) the making of the instrument,

(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
30enactment 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) 35differently 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 40Directors

(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
45bank;

(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
5conditions 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
10instrument;

(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) 15is 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) 20is 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) 25A direction under subsection (1)(a) or (b) is enforceable on an
application made by the Bank of England, by injunction or, in
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) 30In 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
  35number 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
  40be 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
  45or more debts, claims or obligations can be set off against
  each other;

Financial Services (Banking Reform) BillPage 110

• “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) 5The 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
10scope 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
15arrangements;

(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) 20specify 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) 25References 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).

(5) An order may apply to protected arrangements generally or only to
30arrangements—

(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
35arrangements; 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) 40are 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) 45involve 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
5proceedings) 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) 10A 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) 15A resolution instrument (other than an instrument that provides for
securities to be transferred) 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) 20whether an instrument has been produced, delivered,
transferred or otherwise dealt with;

(b) registration.

(3) A resolution instrument may provide for the effect of an instrument
executed, issued or delivered in accordance with the resolution
25instrument.

(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) 30Provision 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) 35In 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 40Procedure

(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
5section 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
10maximise 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) 15This 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
20supplemental 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).

(4) 25Before making a supplemental resolution instrument the Bank of
England must consult—

(a) the PRA,

(b) the FCA, and

(c) the Treasury.

(5) 30The 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) 35This 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) 40An 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) 5makes 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
10securities 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) 15Before making an onward transfer resolution instrument the Bank of
England must consult—

(a) the PRA,

(b) the FCA, and

(c) the Treasury.

(7) 20Section 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—

(a) 25a 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) 30In 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
35make 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
40instrument;

(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
45a 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
5instructions.

(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
10instrument (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).