Banking Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Banking Bill

Banking Bill
Part 1 — Special Resolution Regime
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Incidental provision
(1)
A property transfer instrument may include incidental, consequential or
transitional provision.
(2)
In relying on subsection (1) an instrument—
(a)
may make provision generally or only for specified purposes, and
5
(b)
may make different provision for different purposes.
41
Procedure
(1)
As soon as is reasonably practicable after making a property transfer
instrument in respect of a bank the Bank of England shall send a copy to—
(a)
the bank,
10
(b)
the Treasury,
(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 property transfer
instrument the Bank of England shall publish a copy—
15
(a)
on the Bank’s internet website, and
(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.
42
Supplemental instruments
20
(1)
This section applies where the Bank of England has made a property transfer
instrument in accordance with section 11(2) or 12(2) (“the original
instrument”).
(2)
The Bank of England may make one or more supplemental property transfer
instruments.
25
(3)
A supplemental property transfer instrument is a property transfer instrument
which—
(a)
provides for property, rights or liabilities to be transferred from the
transferor under the original instrument (whether accruing or arising
before or after the original instrument);
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(b)
makes other provision of a kind that an original property transfer
instrument may make under section 33(1)(b) (whether in connection
with a transfer under the original instrument or in connection with a
transfer under that or another supplemental instrument).
(4)
Sections 7 and 8 do not apply to a supplemental property transfer instrument
35
(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).
(5)
Before making a supplemental property transfer instrument the Bank of
England must consult—
40
(a)
the FSA, and
(b)
the Treasury.

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(6)
The possibility of making a supplemental property transfer instrument in
reliance on subsection (2) is without prejudice to the possibility of making of a
new instrument in accordance with section 11(2) or 12(2) (and not in reliance
on subsection (2) above).
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Onward transfer
5
(1)
This section applies where the Bank of England has made a property transfer
instrument in respect of a bridge bank in accordance with section 12(2) (“the
original instrument”).
(2)
The Bank of England may make one or more onward property transfer
instruments.
10
(3)
An onward property transfer instrument is a property transfer instrument
which—
(a)
provides for property, rights or liabilities of the bridge bank to be
transferred (whether accruing or arising before or after the original
instrument);
15
(b)
makes other provision for the purposes of, or in connection with, the
transfer of property, rights or liabilities of the bridge bank (whether the
transfer has been or is to be effected by that instrument, by another
property transfer instrument or otherwise).
(4)
An onward property transfer instrument may relate to property, rights or
20
liabilities of the bridge bank whether or not they were transferred under the
original instrument.
(5)
An onward property transfer instrument may not transfer property, rights or
liabilities to the transferor under the original instrument.
(6)
Sections 7, 8 and 52 do not apply to an onward property transfer instrument
25
(but for other purposes it is to be treated in the same way as any other property
transfer instrument, including for the purposes of the application of a power
under this Part).
(7)
Before making an onward property transfer instrument the Bank of England
must consult—
30
(a)
the FSA, and
(b)
the Treasury.
(8)
Section 42 applies where the Bank of England has made an onward property
transfer instrument.
44
Reverse property transfer
35
(1)
This section applies where the Bank of England has made a property transfer
instrument in accordance with section 12(2) (“the original instrument”)
providing for the transfer of property, rights or liabilities to a bridge bank.
(2)
The Bank of England may make one or more reverse property transfer
instruments in respect of property, rights or liabilities of the bridge bank.
40
(3)
If the Bank of England makes an onward property transfer instrument under
section 43 the Bank may make one or more reverse property transfer
instruments in respect of property, rights or liabilities of a transferee of any of
the following kinds under the onward property transfer instrument—

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(a)
a company wholly owned by the Bank of England,
(b)
a company wholly owned by the Treasury, or
(c)
a company wholly owned by a nominee of the Treasury.
(4)
A reverse property transfer instrument is a property transfer instrument
which—
5
(a)
provides for transfer to the transferor under the original instrument
(where subsection (2) applies);
(b)
provides for transfer to the bridge bank (where subsection (3) applies);
(c)
makes other provision for the purposes of, or in connection with, the
transfer of property, rights or liabilities that are, could be or could have
10
been transferred under paragraph (a) or (b) (whether the transfer has
been or is to be effected by that instrument or otherwise).
(5)
Sections 7, 8 and 52 do not apply to a 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
15
under this Part).
(6)
Before making a reverse property transfer instrument the Bank of England
must consult—
(a)
the FSA, and
(b)
the Treasury.
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(7)
Section 42 applies where the Bank of England has made a reverse property
transfer instrument.
45
Temporary public ownership: property transfer
(1)
This section applies where the Treasury have made a share transfer order, in
respect of securities issued by a bank, in accordance with section 13(2) (“the
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original order”).
(2)
The Treasury may make one or more property transfer orders.
(3)
A property transfer order is an order which—
(a)
provides for property, rights or liabilities of the bank to be transferred
(whether accruing or arising before or after the original order);
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(b)
makes other provision for the purposes of, or in connection with, the
transfer of property, rights or liabilities of the bank (whether the
transfer has been or is to be effected by the order or otherwise).
(4)
Sections 7, 8 and 9 do not apply to a property transfer order.
(5)
A property transfer order is to be treated—
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(a)
in the same way as a share transfer order for the procedural purposes
of section 25, but
(b)
as a property transfer instrument for all other purposes (including for
the purposes of the application of powers under this Part).
(6)
In the application of section 39 by virtue of subsection (5)(b) above, the power
40
to give directions under section 39(7) vests in the Treasury (instead of the Bank
of England).
(7)
Section 42 applies where the Treasury has made a property transfer order.
(8)
Before making a property transfer order the Treasury must consult—

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(a)
the FSA, and
(b)
the Bank of England.
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Temporary public ownership: reverse property transfer
(1)
This section applies where the Treasury have made a property transfer order
in accordance with section 45(2) (“the original order”) providing for the
5
transfer of property, rights or liabilities to a company wholly owned by—
(a)
the Bank of England,
(b)
the Treasury, or
(c)
a nominee of the Treasury.
(2)
The Treasury may make one or more reverse property transfer orders in
10
respect of property, rights or liabilities of the transferee under the original
order.
(3)
A reverse property transfer order is a property transfer order which—
(a)
provides for transfer to the transferor under the original order;
(b)
makes other provision for the purposes of, or in connection with, the
15
transfer of property, rights or liabilities which are, could be or could
have been transferred.
(4)
Sections 7, 8 and 9 do not apply to a reverse property transfer order.
(5)
A reverse property transfer order is to be treated—
(a)
in the same way as a share transfer order for the procedural purposes
20
of section 25, but
(b)
as a property transfer instrument for all other purposes (including for
the purposes of the application of a power under this Part).
(6)
In the application of section 39 by virtue of subsection (5)(b) above, the power
to give directions under section 39(7) vests in the Treasury (instead of the Bank
25
of England).
(7)
Before making a reverse property transfer order the Treasury must consult—
(a)
the FSA, and
(b)
the Bank of England.
(8)
Section 42 applies where the Treasury have made a reverse property transfer
30
order.
47
Restriction of partial transfers
(1)
In this Part “partial property transfer” means a property transfer instrument
which provides for the transfer of some, but not all, of the property, rights and
liabilities of a bank.
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(2)
The Treasury may by order—
(a)
restrict the making of partial property transfers;
(b)
impose conditions on the making of partial property transfers;
(c)
require partial property transfers to include specified provision or
provision to a specified effect;
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(d)
provide for a partial property transfer to be void or voidable, or for
other consequences (including automatic transfer of other property,
rights or liabilities) to arise, if or in so far as the partial property transfer

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is made or purported to be made in contravention of a provision of the
order (or of another order under this section).
(3)
Provision under subsection (2) may, in particular, refer to particular classes of
deposit.
(4)
An order may apply to transfers generally or only to transfers—
5
(a)
of a specified kind, or
(b)
made or applying in specified circumstances.
(5)
An order—
(a)
shall be made by statutory instrument, and
(b)
may not be made unless a draft has been laid before and approved by
10
resolution of each House of Parliament.
48
Power to protect certain interests
(1)
In this section—
(a)
“security interests” means arrangements under which one person
acquires an actual or contingent interest in the property of another
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(including arrangements of a kind described commercially as “title
transfer security” arrangements),
(b)
“set-off” or “netting” arrangements are arrangements under which
Debt 1 can be set off against Debt 2 to reduce the amount of Debt 2, and
(c)
“netting arrangements” includes, in particular, “close-out” netting
20
arrangements, under which theoretical debts are calculated during the
course of a contract for the purpose of enabling them to be set off
against each other.
(2)
The Treasury may by order—
(a)
restrict the making of partial property transfers in cases that involve, or
25
where they might affect, security interests or set-off or netting
arrangements;
(b)
impose conditions on the making of partial property transfers in cases
that involve, or where they might affect, security interests or set-off or
netting arrangements;
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(c)
require partial property transfers to include specified provision, or
provision to a specified effect, in respect of or for purposes connected
with security interests or set-off or netting arrangements;
(d)
provide for a partial property transfer to be void or voidable, or for
other consequences (including automatic transfer of other property,
35
rights or liabilities) to arise, if or in so far as the partial property transfer
is made or purported to be made in contravention of a provision of the
order (or of another order under this section).
(3)
An order may apply to arrangements generally or only to arrangements—
(a)
of a specified kind, or
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(b)
made or applying in specified circumstances.
(4)
An order may include provision for determining which arrangements are to
be, or not to be, treated as security interests or set-off or netting arrangements;
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
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indications of how they are treated, or are intended to be treated, in
commercial practice.

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(5)
In this section “arrangements” includes arrangements which—
(a)
are formed wholly or partly by one or more contracts;
(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.
5
(6)
An order—
(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.
Compensation
10
49
Orders
(1)
This Part provides three methods of protecting the financial interests of
transferors and others in connection with share transfer instruments and
orders and property transfer instruments.
(2)
A “compensation scheme order” is an order —
15
(a)
establishing a scheme for determining whether transferors should be
paid compensation, or providing for transferors to be paid
compensation, and
(b)
establising a scheme for paying any compensation.
(3)
A “resolution fund order” is an order establishing a scheme under which
20
transferors become entitled to the proceeds of the disposal of things
transferred—
(a)
in specified circumstances, and
(b)
to a specified extent.
(4)
A “third party compensation order” is provision made in accordance with
25
section 59 for compensation to be paid to persons other than transferors.
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Sale to private sector purchaser
(1)
This section applies if the Bank of England makes a share transfer instrument
or a property transfer instrument in accordance with section 11(2).
(2)
The Treasury shall make a compensation scheme order.
30
(3)
An order made by virtue of subsection (2) may include a third party
compensation order.
(4)
In the case of a partial property transfer, an order made by virtue of subsection
(2) must include a third party compensation order.
51
Transfer to temporary public ownership
35
(1)
This section applies if the Treasury make a share transfer order in accordance
with section 13(2).
(2)
The Treasury shall make either—
(a)
a compensation scheme order, or
(b)
a resolution fund order.
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(3)
A resolution fund order made by virtue of subsection (2)(b) may include—
(a)
a compensation scheme order;
(b)
a third party compensation order (which may, in particular, make
provision, in respect of specified classes of creditor, for rights in
addition to any rights they may have by virtue of the resolution fund
5
order).
(4)
A compensation scheme order made by virtue of subsection (2) may include a
third party compensation order.
52
Transfer to bridge bank
(1)
This section applies if the Bank of England makes a property transfer
10
instrument in accordance with section 12(2).
(2)
The Treasury shall make a resolution fund order.
(3)
An order made by virtue of subsection (2) may include—
(a)
a compensation scheme order;
(b)
a third party compensation order (which may, in particular, make
15
provision, in respect of specified classes of creditor, for rights in
addition to any rights they may have by virtue of the resolution fund
order).
(4)
In the case of a partial property transfer, the resolution fund order must
include a third party compensation order.
20
53
Onward and reverse transfers
(1)
This section applies where—
(a)
the Treasury make an onward share transfer order under section 28,
(b)
the Treasury makes a reverse share transfer order under section 29,
(c)
the Bank of England makes a bridge bank share transfer instrument
25
under section 30,
(d)
the Bank of England makes a bridge bank reverse share transfer
instrument under section 31,
(e)
the Bank of England makes an onward property transfer instrument
under section 43,
30
(f)
the Bank of England makes a reverse property transfer instrument
under section 44,
(g)
the Treasury make a property transfer order under section 45, or
(h)
the Treasury make a reverse property transfer order under section 46.
(2)
The Treasury may make—
35
(a)
a compensation scheme order;
(b)
a third party compensation order.
54
Independent valuer
(1)
A compensation scheme order may provide for the amount of any
compensation payable to be determined by a person appointed in accordance
40
with the order (the “independent valuer”); and subsections (2) to (5) apply to
an order which includes provision for an independent valuer.