(9) Before making a reverse transfer resolution instrument the Bank of
England must consult—

(a) 15the 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—

“41A Transfer of property subsequent to resolution instrument

(1) This section applies where the Bank of England has made a
5resolution instrument.

(2) The Bank of England may make one or more property transfer
instruments in respect of property, rights or liabilities of the bank.

(3) Sections 7 and 8A do not apply to a property transfer instrument
under subsection (2).

(4) 10Before making a property transfer instrument under subsection (2)
the Bank of England must consult—

(a) the PRA,

(b) the FCA, and

(c) the Treasury.”

(2) 15In section 42 (supplemental property transfer instruments)—

(a) in subsection (1) for “12(2)” substitute “12(2) or 41A(2)”;

(b) in subsection (4) for “and 8” substitute “, 8 and 8A”;

(c) in subsection (6) for “or 12(2)” substitute “, 12(2) or 41A(2)”.

(3) After section 44 insert—

“44A 20Bail in: reverse property transfer

(1) This section applies where the Bank of England has made a property
transfer instrument in accordance with section 41A(2) (“the original
instrument”).

(2) The Bank of England may make one or more bail-in reverse property
transfer instruments in respect of property, rights or liabilities of the
transferee under the original instrument.

(3) A bail-in reverse property transfer instrument is a property transfer
5instrument which—

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

(b) makes other provision for the purposes of, or in connection
with, the transfer of property, rights or liabilities which are,
10or could be or could have been, transferred under paragraph
(a) (whether the transfer has been or is to be effected by that
instrument or otherwise).

(4) The Bank of England may make a bail-in reverse property transfer
instrument only with the written consent of the transferee under the
15original instrument.

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

(6) 20Before making a bail-in reverse property transfer instrument the
Bank of England must consult—

(a) the PRA,

(b) the FCA, and

(c) the Treasury.

(7) 25Section 42 (supplemental instruments) applies where the Bank of
England has made a bail-in reverse property transfer instrument.

44B Property transfer instruments: special bail-in provision

(1) A property transfer instrument under section 12(2) or 41A(2) may
make special bail-in provision with respect to the bank (see section
3048B).

(2) In the case of a property transfer instrument under section 12(2), the
power under subsection (1) to make the provision described in
section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(3)) includes
power to make provision replacing a liability (of any form) of the
35bank mentioned in subsection (1) with a security (of any form or
class) of the bridge bank mentioned in section 12(1).

(3) Where securities of the bridge bank (“B”) are, as a result of subsection
(2), held by a person other than the Bank of England, that does not
prevent B from being regarded for the purposes of this Part (see
40particularly section 12(1)) as being wholly owned by the Bank of
England, as long as the Bank of England continues to hold all the
ordinary shares issued by B.

44C Report on special bail-in provision

(1) This section applies where the Bank of England makes a property
45transfer instrument containing provision made in reliance on section
44B.

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

(3) If the provision departs from the insolvency treatment principles, the
5report must state the reasons why it does so.

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

(a) the provision made by the instrument must be consistent
with treating all the liabilities of the bank in accordance with
10the 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) A report must comply with any other requirements as to content that
may be specified by the Treasury.

(6) 15A report must be made as soon as reasonably practicable after the
making of the property transfer instrument to which it relates.

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

(4) In section 48A (creation of liabilities), in subsection (1), after “44(4)(c)” insert
20“, 44A(3)(b)”.

Compensation

6 (1) In section 49 (orders)—

(a) in subsection (1), for “three” substitute “four” and for “and property
transfer instruments” substitute “, property transfer instruments and
25orders and resolution instruments”;

(b) after subsection (2) insert—

“(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
30compensation.”

(2) After section 52 insert—

“52A Bail-in option

(1) Subsection (2) applies if the Bank of England makes—

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

(b) 35a property transfer instrument under section 41A(2), or

(c) a supplemental resolution instrument under section 48U(2).

(2) The Treasury must make a bail-in compensation order (see section
49(2A)).

(3) A bail-in compensation order may include provision for—

(a) 40an independent valuer (in which case sections 54 to 56 are to
apply);

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

(3) In section 53 (onward and reverse transfers), in subsection (1)—

(a) after paragraph (f) insert—

“(fa) the Bank of England makes a reverse property
transfer instrument under section 44A(2),

(fb) 5the Bank of England makes a supplemental property
transfer instrument by virtue of section 44A(7),”;

(b) omit the “or” after paragraph (g);

(c) after paragraph (h) insert—

“(i) the Bank of England makes an onward transfer
10resolution instrument under section 48V(2),”

“the Bank of England makes a reverse transfer
resolution instrument under section 48W(2) or (3), or

(k) the Bank of England makes a supplemental resolution
instrument by virtue of section 48V(7) or 48W(10).”

(4) 15In section 54 (independent valuer)—

(a) in subsection (1), after “compensation scheme order” insert “or bail-
in compensation order”;

(b) in subsection (4)(b), after “order” insert “or bail-in compensation
order”.

(5) 20In section 56 (independent valuer: money), in subsection (2)(b) for “or third
party compensation order” substitute “, third party compensation order or
bail-in compensation order”.

(6) In section 57 (valuation principles), in subsection (1), after “order” insert “or
bail-in compensation order”.

(7) 25After section 60 insert—

“60A Further mandatory provision: bail-in provision

(1) The Treasury may make regulations about compensation
arrangements in the case of—

(a) resolution instruments under section 12A(2) and
30supplemental resolution instruments under section 48U(2),
and

(b) instruments (made under any provision) that include special
bail-in provision.

(2) Regulations may—

(a) 35require a compensation scheme order, a third party
compensation order or a bail-in compensation order to
include provision of a specified kind or to specified effect;

(b) make provision that is to be treated as forming part of any
such order (whether (i) generally, (ii) only if applied, (iii)
40unless disapplied, or (iv) subject to express modification).

(3) 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) 45to be contingent upon the occurrence or non-occurrence of
specified events;