Banking Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Banking Bill

Banking Bill
Part 1 — Special Resolution Regime
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The stabilisation options
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Private sector purchaser
(1)
The first stabilisation option is to sell all or part of the business of the bank to a
commercial purchaser.
(2)
For that purpose the Bank of England may make—
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(a)
one or more share transfer instruments;
(b)
one or more property transfer instruments.
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Bridge bank
(1)
The second stabilisation option is to transfer all or part of the business of the
bank to a company which is wholly owned by the Bank of England (a “bridge
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bank”).
(2)
For that purpose the Bank of England may make one or more property transfer
instruments.
(3)
The code of practice under section 5 must include provision about the
management and control of bridge banks including, in particular, provision
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about—
(a)
setting objectives,
(b)
the content of the articles of association,
(c)
the content of reports under section 70(1),
(d)
different arrangements for management and control at different stages,
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and
(e)
eventual disposal.
(4)
Where property, rights or liabilities are first transferred by property transfer
instrument to a bridge bank and later transferred (whether or not by the
exercise of a power under this Part) to another company which is wholly
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owned by the Bank of England, that other company is an “onward bridge
bank”.
(5)
An onward bridge bank—
(a)
is a bridge bank for the purposes of—
(i)
subsection (3),
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(ii)
section 67,
(iii)
section 69, and
(iv)
section 70(5), but
(b)
is not a bridge bank for the purposes of—
(i)
section 28(1),
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(ii)
section 40(1), or
(iii)
section 70(1).
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Temporary public ownership
(1)
The third stabilisation option is to take the bank into temporary public
ownership.
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(2)
For that purpose the Treasury may make one or more share transfer orders in
which the transferee is—

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Part 1 — Special Resolution Regime
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(a)
a nominee of the Treasury, or
(b)
a company wholly owned by the Treasury.
(3)
The code of practice under section 5 must include provision about—
(a)
the content of share transfer orders, and
(b)
the management of transferees under share transfer orders.
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Transfer of securities
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Interpretation: “securities”
(1)
In this Part “securities” includes anything falling within any of the following
classes.
(2)
Class 1: shares and stock.
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(3)
Class 2: debentures, including—
(a)
debenture stock,
(b)
loan stock,
(c)
bonds,
(d)
certificates of deposit, and
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(e)
any other instrument creating or acknowledging a debt.
(4)
Class 3: warrants or other instruments that entitle the holder to acquire
anything in Class 1 or 2.
(5)
Class 4: rights which—
(a)
are granted by a deposit-taker, and
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(b)
form part of the deposit-taker’s own funds for the purposes of section
1 of Chapter 2 of Title V of Directive 2006/48/EC (on the taking up and
pursuit of the business of credit institutions).
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Share transfer instrument
(1)
A share transfer instrument is an instrument which—
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(a)
provides for securities issued by a specified bank to be transferred;
(b)
makes 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
share transfer instrument or otherwise).
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(2)
A share transfer instrument may relate to—
(a)
specified securities, or
(b)
securities of a specified description.
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Share transfer order
(1)
A share transfer order is an order which—
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(a)
provides for securities issued by a specified bank to be transferred;
(b)
makes 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 order, by another share
transfer order or otherwise).
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Part 1 — Special Resolution Regime
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(2)
A share transfer order may relate to—
(a)
specified securities, or
(b)
securities of a specified description.
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Effect
(1)
In this section “transfer” means a transfer provided for by a share transfer
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instrument or order.
(2)
A transfer takes effect by virtue of the instrument or order (and in accordance
with its provisions as to timing or other ancillary matters).
(3)
A transfer takes effect despite any restriction arising by virtue of contract or
legislation or in any other way.
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(4)
In subsection (3) “restriction” includes—
(a)
any restriction, inability or incapacity affecting what can and cannot be
assigned or transferred (whether generally or by a particular person),
and
(b)
a requirement for consent (by any name).
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(5)
A share transfer instrument or order may provide for a transfer to take effect
free from any trust, liability or other encumbrance (and may include provision
about their extinguishment).
(6)
A share transfer instrument or order may extinguish rights to acquire securities
falling within Class 1 or 2 in section 13.
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Continuity
(1)
A share transfer instrument or order may provide for a transferee to be treated
for any purpose connected with the transfer as the same person as the
transferor.
(2)
A share transfer instrument or order may provide for agreements made or
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other things done by or in relation to a transferor to be treated as made or done
by or in relation to the transferee.
(3)
A share transfer instrument or order may provide for anything (including legal
proceedings) that relates to anything transferred and is in the process of being
done by or in relation to the transferor immediately before the transfer date, to
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be continued by or in relation to the transferee.
(4)
A share transfer instrument or order may modify references (express or
implied) in an instrument or document to a transferor.
(5)
A share transfer instrument or order may require or permit—
(a)
a transferor to provide a transferee with information and assistance;
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(b)
a transferee to provide a transferor with information and assistance.
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Conversion and delisting
(1)
A share transfer instrument or order may provide for securities to be converted
from one form or class to another.

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Part 1 — Special Resolution Regime
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(2)
A share transfer instrument or order may provide for the listing of securities,
under section 74 of the Financial Services and Markets Act 2000, to be
discontinued.
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Directors
(1)
A share transfer instrument may enable the Bank of England—
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(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)
A share transfer order may enable the Treasury—
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(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.
(3)
Appointments under subsection (1)(d) are to be on terms and conditions
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agreed with the Bank of England.
(4)
Appointments under subsection (2)(d) are to be on terms and conditions
agreed with the Treasury.
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Ancillary instruments: production, registration, &c.
(1)
A share transfer instrument or order may permit or require the execution, issue
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or delivery of an instrument.
(2)
A share transfer instrument or order may provide for a transfer to have effect
irrespective of—
(a)
whether an instrument has been produced, delivered, transferred or
otherwise dealt with;
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(b)
registration.
(3)
A share transfer instrument or order may provide for the effect of an
instrument executed, issued or delivered in accordance with the order.
(4)
A share transfer instrument or order may modify or annul the effect of an
instrument.
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(5)
A share transfer instrument or order may—
(a)
entitle a transferee to be registered in respect of transferred securities;
(b)
require a person to effect registration.
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Termination rights, &c.
(1)
In this section “default event provision” means a provision of a contract or
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other agreement that if a specified event occurs—
(a)
the agreement is terminated, modified or replaced,
(b)
rights or duties under the agreement are terminated, modified or
replaced,
(c)
a right accrues to terminate, modify or replace the agreement,
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(d)
a right accrues to terminate, modify or replace rights or duties under
the agreement,
(e)
a sum becomes payable or ceases to be payable,
(f)
delivery of anything becomes due or ceases to be due,
(g)
a right to claim a payment or delivery accrues, changes or lapses,
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(h)
any other right accrues, changes or lapses, or
(i)
an interest is created, changes or lapses.
(2)
A share transfer instrument or order may provide for subsection (3) or (4) to
apply (but need not apply either).
(3)
If this subsection applies, the share transfer instrument or order is to be
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disregarded in determining whether a default event provision applies.
(4)
If this subsection applies, the share transfer instrument or order is to be
disregarded in determining whether a default event provision applies except
in so far as the instrument or order provides otherwise.
(5)
In subsections (3) and (4) a reference to the share transfer instrument or order
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is a reference to—
(a)
the making of the instrument or order,
(b)
anything that is to be, or may be, done under or by virtue of the
instrument or order, and
(c)
any action or decision taken or made under this or another enactment
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in so far as it resulted in, or was connected to, the making of the
instrument or order.
(6)
Provision under subsection (2) may apply subsection (3) or (4) generally or
only for specified purposes.
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Incidental provision
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(1)
A share transfer instrument or order may include incidental, consequential or
transitional provision.
(2)
In relying on subsection (1) a share transfer instrument or order—
(a)
may make provision generally or only for specified purposes, and
(b)
may make different provision for different purposes.
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Procedure: instruments
(1)
As soon as is reasonably practicable after making a share transfer instrument
in respect of a bank the Bank of England shall send a copy to—
(a)
the bank,
(b)
the Treasury,
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(c)
the FSA, and
(d)
any other person specified in the code of practice under section 5.
(2)
As soon as is reasonably practicable after making a share transfer instrument
the Bank of England shall publish a copy—
(a)
on the Bank’s internet website, and
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(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.