Banking Bill

House of Commons

Session 2007 - 08
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Banking Bill

Banking Bill
Part 3 — Bank Administration
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142
Sharing information
(1)
This section applies to bank administration following transfer to a bridge bank.
(2)
Within the period of 5 days beginning with the day on which the bank
administrator is appointed, the Bank of England must give the bank
administrator information about the financial positions of the residual bank
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and the bridge bank.
(3)
While the residual bank is in bank administration the bridge bank must give
the bank administrator on request information about the financial position of
the bridge bank that the bank administrator requires for the purposes of
pursuing Objective 1 in section 131.
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(4)
Until the Bank of England has given an Objective 1 Achievement Notice, the
bank administrator must—
(a)
give the Bank of England information on request,
(b)
allow the Bank of England access to records on request,
(c)
give the bridge bank information on request,
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(d)
allow the bridge bank access to records on request,
(e)
keep the Bank of England informed about, and allow the Bank to
participate in, any discussions between the bank administrator and
another person which relate to, or are likely to affect, pursuit of
Objective 1 in section 131, and
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(f)
keep the bridge bank informed about, and allow the bridge bank to
participate in, any discussions between the bank administrator and
another person which relate to, or are likely to affect, pursuit of
Objective 1 in section 131.
(5)
The Treasury shall by regulations prescribe—
25
(a)
the classes of information that must be provided under subsections (2)
to (4), and
(b)
the classes of record to which access must be allowed under subsection
(4).
(6)
Regulations under subsection (5)—
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(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of either
House of Parliament.
Multiple transfers
143
General application of this Part
35
(1)
This section applies where more than one property transfer instrument is made
in respect of a bank.
(2)
For that purpose “property transfer instrument” includes—
(a)
supplemental instruments under section 42,
(b)
onward property transfer instruments under section 43, and
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(c)
property transfer orders under section 45.
(3)
This Part applies to the bank with any modifications specified by the Treasury
in regulations.

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(4)
The regulations—
(a)
shall 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.
144
Bridge bank to private purchaser
5
(1)
This section applies where the Bank of England gives a bank administrator —
(a)
an Objective 1 Achievement Notice in respect of a bridge bank, and
(b)
notice that Objective 1 is still required to be pursued in respect of a
commercial purchaser who has acquired all or part of the business of
the bridge bank.
10
(2)
An Objective 1 Achievement Notice accompanied by a notice under subsection
(1)(b) is referred to in this Part as an Objective 1 Interim Achievement Notice.
(3)
Where an Objective 1 Interim Achievement Notice is given, Objective 1
continues to apply—
(a)
in accordance with section 132(3), and
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(b)
with the commercial purchaser being treated as the “private sector
purchaser”.
(4)
An Objective 1 Interim Achievement Notice in respect of the bridge bank—
(a)
has effect as between the bank administrator and the bridge bank, but
(b)
has no other effect for the purposes of provisions of this Part which
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refer to the giving of an Objective 1 Achievement Notice.
(5)
When the Bank of England gives the bank administrator an Objective 1
Achievement Notice in respect of the commercial purchaser, section 133 and
other provisions of this Part which refer to the giving of an Objective 1
Achievement Notice shall have effect.
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145
Property transfer from bridge bank
(1)
This section applies where the Bank of England —
(a)
transfers all or part of the business of a bank (“the original bank”) to a
bridge bank (“the original bridge bank”) by making a property transfer
instrument in accordance with section 12(2), and
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(b)
later makes or proposes to make an onward property transfer
instrument under section 43(2) from the bridge bank to a transferee
(“the onward transferee”).
(2)
If the onward transferee is a company which is wholly owned by the Bank of
England—
35
(a)
the onward transferee is treated as a bridge bank for the purposes of
this Part, and
(b)
the original bridge bank is treated as a residual bank for the purposes
of this Part.
(3)
In any other case, the Bank of England may determine that the original bridge
40
bank is to be treated as a residual bank for the purposes of this Part.
(4)
Where the original bridge bank is put into bank administration in reliance on
subsection (2)(b), Objective 1 shall apply in accordance with section 132(4) in
relation to both—

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(a)
services provided by the original bank to the original bridge bank, and
(b)
services provided by the original bridge bank to the onward transferee.
(5)
Where the original bridge bank is put into bank administration in reliance on
a determination under subsection (3), Objective 1 shall apply in accordance
with—
5
(a)
section 132(3) in relation to services provided by the original bridge
bank to the onward transferee, and
(b)
section 132(4) in relation to services provided by the original bank to
the original bridge bank.
(6)
But the Bank may determine—
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(a)
that subsection (5) does not apply, and
(b)
that section 144 shall apply as if the Bank had given—
(i)
an Objective 1 Interim Achievement Notice in respect of the
original bridge bank, and
(ii)
a notice under section 144(1)(b) in respect of the onward
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transferee.
146
Property transfer from temporary public ownership
(1)
This section applies where the Treasury—
(a)
make a share transfer order, in respect of securities issued by a bank, in
accordance with section 13(2), and
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(b)
later make a property transfer order from the bank under section 45(2).
(2)
This Part applies to the transferor under the property transfer order as to the
transferor under a property transfer instrument.
(3)
For that purpose this Part applies with any modifications specified by the
Treasury in regulations; and the regulations—
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(a)
shall 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.
Termination
147
Successful rescue
30
(1)
This section applies if—
(a)
the Bank of England has given an Objective 1 Achievement Notice, and
(b)
the bank administrator has pursued Objective 2(a) in section 134 and
believes that it has been achieved.
(2)
The bank administrator may give a notice under paragraph 80 of Schedule B1
35
to the Insolvency Act 1986 (notice bringing administrator’s appointment to an
end on achievement of objectives).
(3)
A bank administrator who gives a notice in accordance with subsection (2)
must send a copy to the FSA.
(4)
Failure without reasonable excuse to comply with subsection (3) is an offence.
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148
Winding-up or voluntary arrangement
(1)
This section applies if—
(a)
the Bank of England has given an Objective 1 Achievement Notice, and
(b)
the bank administrator pursues Objective 2(b) in section 134.
(2)
The bank administrator may—
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(a)
give a notice under paragraph 84 of Schedule B1 to the Insolvency Act
1986 (no more assets for distribution), or
(b)
make a proposal in accordance with section 1 of that Act (company
voluntary arrangement).
(3)
Part 1 of that Act shall apply to a proposal made by a bank administrator, with
10
the following modifications.
(4)
In section 3 (summoning of meetings) subsection (2) (and not (1)) applies.
(5)
The action that may be taken by the court under section 5(3) (effect of approval)
includes suspension of the bank administration order.
(6)
On the termination of a company voluntary arrangement the bank
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administrator may apply to the court to lift the suspension of the bank
administration order.
(7)
The bank administrator may not act under subsection (2) above unless satisfied
that the bank has received any funds it is likely to receive from any scheme
under a resolution fund order under section 52.
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Miscellaneous
149
Disqualification of directors
(1)
In this section “the Disqualification Act” means the Company Directors
Disqualification Act 1986.
(2)
In the Disqualification Act—
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(a)
a reference to liquidation includes a reference to bank administration,
(b)
a reference to winding up includes a reference to making or being
subject to a bank administration order,
(c)
a reference to becoming insolvent includes a reference to becoming
subject to a bank administration order, and
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(d)
a reference to a liquidator includes a reference to a bank administrator.
(3)
For the purposes of the application of section 7(3) of the Disqualification Act
(disqualification order or undertaking) to a bank which is subject to a bank
administration order, the responsible office-holder is the bank administrator.
(4)
After section 21A of the Disqualification Act (bank insolvency - inserted by
35
section 115 above) insert—
“21B
Bank administration
Section 149 of the Banking Act 2008 provides for this Act to apply in
relation to bank administration as it applies in relation to liquidation.”