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
31

Incidental functions
63
General continuity obligation: property transfers
(1)
In this section and section 64—
(a)
“residual bank” means a bank all or part of whose business has been
transferred in accordance with section 11(2)(b) or 12(2),
5
(b)
“group company” means anything which is, or was immediately before
the transfer, a group undertaking in relation to a residual bank,
(c)
“group undertaking” has the meaning given by section 1161(5) of the
Companies Act 2006 (interpretation),
(d)
“the transferred business” means the part of the bank’s business that
10
has been transferred, and
(e)
“transferee” means a commercial purchaser or bridge bank to whom all
or part of the transferred business has been transferred.
(2)
The residual bank and each group company must provide such services and
facilities as are required to enable a transferee to operate the transferred
15
business, or part of it, effectively.
(3)
The duty under subsection (2) (the “continuity obligation”) may be enforced as
if created by contract between the residual bank or group company and the
transferee.
(4)
The duty to provide services and facilities in pursuance of the continuity
20
obligation is subject to a right to receive reasonable consideration.
(5)
The continuity obligation is not limited to the provision of services or facilities
directly to a transferee.
(6)
The Bank of England may, with the consent of the Treasury, by notice to the
residual bank or a group company state that in the Bank’s opinion—
25
(a)
specified activities are required to be undertaken in accordance with
the continuity obligation;
(b)
activities are required be undertaken in accordance with the continuity
obligation on specified terms.
(7)
A notice under subsection (6) shall be determinative of the nature and extent of
30
the continuity obligation as from the time when the notice is given.
64
Special continuity obligations: property transfers
(1)
Expressions in this section have the same meaning as in section 63.
(2)
The Bank of England may—
(a)
cancel a contract or other arrangement between the residual bank and
35
a group company (whether or not rights or obligations under it have
been transferred to a transferee);
(b)
modify the terms of a contract or other arrangement between the
residual bank and a group company (whether or not rights or
obligations under it have been transferred to a transferee);
40
(c)
add or substitute a transferee as a party to a contract or other
arrangement between the residual bank and a group company;

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(d)
confer and impose rights and obligations on a group company and a
transferee, which shall have effect as if created by contract between
them;
(e)
confer and impose rights and obligations on the residual bank and a
transferee which shall have effect as if created by contract between
5
them.
(3)
In modifying or setting terms under subsection (2) the Bank of England shall
aim, so far as is reasonably practicable, to preserve or include—
(a)
provision for reasonable consideration, and
(b)
any other provision that would be expected in arrangements concluded
10
between parties dealing at arm’s length.
(4)
The power under subsection (2)—
(a)
may be exercised only in so far as the Bank of England thinks it
necessary to ensure the provision of such services and facilities as are
required to enable the transferee to operate the transferred business, or
15
part of it, effectively,
(b)
may be exercised only with the consent of the Treasury, and
(c)
must be exercised by way of provision in a property transfer
instrument (or supplemental instrument).
65
Continuity obligations: onward property transfers
20
(1)
In this section—
(a)
“onward transfer” means a transfer of property, rights or liabilities
(whether or not under a power in this Part) from—
(i)
a person who is a transferee under a property transfer
instrument under section 12(2) (an “original transferee”), or
25
(ii)
a bank, securities issued by which were earlier transferred by a
share transfer order under section 13(2), and
(b)
the person to whom the onward transfer is made is referred to as an
“onward transferee”.
(2)
The continuity authority may—
30
(a)
provide for an obligation under section 63 to apply in respect of an
onward transferee;
(b)
extend section 64 so as to permit action to be taken under section 64(2)
for the purpose of enabling an onward transferee to operate transferred
business, or part of it, effectively.
35
(3)
“The continuity authority” means—
(a)
the Bank of England, where subsection (1)(a)(i) applies, and
(b)
the Treasury, where subsection (1)(a)(ii) applies.
(4)
Subsection (2) may be relied on to impose obligations on—
(a)
an original transferee (where the original transfer was a property
40
transfer),
(b)
a residual bank within the meaning of section 63 (where the original
transfer was a property transfer),
(c)
the bank (where the original transfer was a share transfer),
(d)
anything which is or was a group undertaking (within the meaning of
45
section 1161(5) of the Companies Act 2006) of anything within
paragraphs (a) to (c), or

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(e)
any combination.
(5)
Subsection (2) may be used to impose obligations—
(a)
in addition to obligations under or by virtue of section 63 or 64, or
(b)
replacing obligations under or by virtue of either of those sections to a
specified extent.
5
(6)
A power under subsection (2) is exerciseable by giving a notice to each
person—
(a)
on whom a continuity obligation is to be imposed under the power, or
(b)
who is expected to benefit from a continuity obligation under the
power.
10
(7)
Sections 63(3) to (7) and 64(3) and (4) apply to an obligation as applied under
subsection (2)—
(a)
construing “transferred business” as the business transferred by means
of the onward transfer, and
(b)
with any other necessary modification.
15
(8)
The Bank of England may act under or by virtue of subsection (2) only with the
consent of the Treasury.
66
General continuity obligation: share transfers
(1)
In this section and section 67—
(a)
“transferred bank” means a bank all or part of the ownership of which
20
has been transferred in accordance with section 11(2)(a) or 13(2),
(b)
“former group company” means anything which was a group
undertaking in relation to the transferred bank immediately before the
transfer (whether or not it is also a group undertaking in relation to the
transferred bank immediately after the transfer),
25
(c)
“group undertaking” has the meaning given by section 1161(5) of the
Companies Act 2006 (interpretation), and
(d)
“the continuity authority” means—
(i)
the Bank of England, where ownership was transferred in
accordance with section 11(2)(a), and
30
(ii)
the Treasury, where ownership was transferred in accordance
with section 13(2).
(2)
Each former group company must provide such services and facilities as are
required to enable the transferred bank to operate effectively.
(3)
The duty under subsection (2) (the “continuity obligation”) may be enforced as
35
if created by contract between the transferred bank and the former group
company.
(4)
The duty to provide services and facilities in pursuance of the continuity
obligation is subject to a right to receive reasonable consideration.
(5)
The continuity obligation is not limited to the provision of services or facilities
40
directly to the transferred bank.
(6)
The continuity authority may by notice to a former group company state that
in the authority’s opinion—
(a)
specified activities are required to be undertaken in accordance with
the continuity obligation;
45

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(b)
activities are required be undertaken in accordance with the continuity
obligation on specified terms.
(7)
A notice under subsection (6) shall be determinative of the nature and extent of
the continuity obligation as from the time when the notice is given.
(8)
The Bank of England may act under or by virtue of subsection (6) only with the
5
consent of the Treasury.
67
Special continuity obligations: share transfers
(1)
Expressions in this section have the same meaning as in section 66.
(2)
The continuity authority may—
(a)
cancel a contract or other arrangement between the transferred bank
10
and a former group company;
(b)
modify the terms of a contract or other arrangement between the
transferred bank and a former group company;
(c)
confer and impose rights and obligations on a former group company
and the transferred bank, which shall have effect as if created by
15
contract between them.
(3)
In modifying or setting terms under subsection (2) the continuity authority
shall aim, so far as is reasonably practicable, to preserve or include—
(a)
provision for reasonable consideration, and
(b)
any other provision that would be expected in arrangements concluded
20
between parties dealing at arm’s length.
(4)
The power under subsection (2)—
(a)
may be exercised only in so far as the continuity authority thinks it
necessary to ensure the provision of such services and facilities as are
required to enable the transferred bank to operate effectively,
25
(b)
may be exercised by the Bank of England only with the consent of the
Treasury, and
(c)
must be exercised by way of provision in a share transfer instrument or
order (or supplemental instrument or order).
68
Continuity obligations: onward share transfers
30
(1)
In this section “onward transfer” means a transfer (whether or not under a
power in this Part) of securities issued by a bank where—
(a)
securities issued by the bank were earlier transferred by share transfer
order under section 13(2), or
(b)
the bank was the transferee under a property transfer instrument under
35
section 12(2).
(2)
The continuity authority may—
(a)
provide for an obligation under section 66 to apply in respect of the
bank after the onward transfer;
(b)
extend section 67 so as to permit action to be taken under section 67(2)
40
to enable the bank to operate effectively after the onward transfer.
(3)
In this section “continuity authority” has the same meaning as in sections 66
and 67.

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(4)
Subsection (2) may be relied on to impose obligations on—
(a)
the bank,
(b)
anything which is or was a group undertaking (within the meaning of
section 1161(5) of the Companies Act 2006) of the bank,
(c)
anything which is or was a group undertaking of the residual bank (in
5
a case to which subsection (1)(b) applies), or
(d)
any combination.
(5)
Subsection (2) may be used to impose obligations—
(a)
in addition to obligations under or by virtue of section 66 or 67, or
(b)
replacing obligations under or by virtue of either of those sections to a
10
specified extent.
(6)
A power under subsection (2) is exerciseable by giving a notice to each
person—
(a)
on whom a continuity obligation is to be imposed under the power, or
(b)
who is expected to benefit from a continuity obligation under the
15
power.
(7)
Sections 66(3) to (7) and 67(3) and (4) apply to an obligation as applied under
subsection (2) with any necessary modification.
(8)
The Bank of England may act under or by virtue of subsection (2) only with the
consent of the Treasury.
20
69
Continuity obligations: consideration and terms
(1)
The Treasury may by order specify matters which are to be or not to be
considered in determining—
(a)
what amounts to reasonable consideration for the purpose of sections
63 to 68;
25
(b)
what provisions to include in accordance with section 64(3)(b) or
67(3)(b).
(2)
An order—
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of either
30
House of Parliament.
(3)
A continuity authority may give guarantees or indemnities in respect of
consideration for services or facilities provided or to be provided in pursuance
of a continuity obligation.
(4)
In this section “continuity authority”—
35
(a)
in relation to sections 63 and 64, means the Bank of England, and
(b)
in relation to sections 65 to 68, has the same meaning as in those
sections.
70
Continuity obligations: termination
(1)
The continuity authority may by notice terminate an obligation arising under
40
section 63 or 66.
(2)
The power under subsection (1) is exerciseable by giving a notice to each
person—

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(a)
on whom the obligation is imposed, or
(b)
who has benefited or might have expected to benefit from the
obligation.
(3)
In this section “continuity authority”—
(a)
in relation to section 63, means the Bank of England, and
5
(b)
in relation to section 66, has the same meaning as in that section.
(4)
A reference in subsection (1) to obligations under a section includes a reference
to obligations under that section as applied under section 65 or 68.
71
Pensions
(1)
This section applies to—
10
(a)
share transfer orders,
(b)
share transfer instruments, and
(c)
property transfer instruments.
(2)
An order or instrument may make provision—
(a)
about the consequences of a transfer for a pension scheme;
15
(b)
about property, rights and liabilities of any pension scheme of the bank.
(3)
In particular, an order or instrument may—
(a)
modify any rights and liabilities;
(b)
apportion rights and liabilities;
(c)
transfer property of, or accrued rights in, one pension scheme to
20
another (with or without consent).
(4)
Provision by virtue of this section may (but need not) amend the terms of a
pension scheme.
(5)
A share or property transfer instrument may make provision in reliance on this
section only with the consent of the Treasury.
25
(6)
In this section—
(a)
“pension scheme” includes any arrangement for the payment of
pensions, allowances and gratuities, and
(b)
a reference to a pension scheme of a bank is a reference to a scheme in
respect of which the bank is or was an employer.
30
72
Enforcement
(1)
The Treasury may by regulations make provision for the enforcement of
obligations imposed by or under—
(a)
a share transfer order,
(b)
a share transfer instrument, or
35
(c)
a property transfer instrument.
(2)
Regulations—
(a)
may confer jurisdiction on a court or tribunal;
(b)
may not impose a penalty or create a criminal offence;
(c)
may make provision which has effect in respect of an order or
40
instrument only if applied by the order or instrument.
(3)
Regulations—

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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.
73
Disputes
(1)
This section applies to—
5
(a)
share transfer orders,
(b)
share transfer instruments, and
(c)
property transfer instruments.
(2)
An order or instrument may include provision for disputes to be determined
in a specified manner.
10
(3)
Provision by virtue of subsection (2) may, in particular—
(a)
confer jurisdiction on a court or tribunal;
(b)
confer discretion on a specified person.
74
Tax
(1)
The Treasury may by regulations make provision about the fiscal
15
consequences of the exercise of a stabilisation power.
(2)
Regulations may relate to—
(a)
capital gains tax;
(b)
corporation tax;
(c)
income tax;
20
(d)
inheritance tax;
(e)
stamp duty;
(f)
stamp duty land tax;
(g)
stamp duty reserve tax.
(3)
Regulations may apply to—
25
(a)
anything done in connection with an instrument or order;
(b)
things transferred or otherwise affected by virtue of an instrument or
order;
(c)
a transferor or transferee under an instrument or order;
(d)
persons otherwise affected by an instrument or order.
30
(4)
Regulations may—
(a)
modify or disapply an enactment;
(b)
provide for an action to have or not have specified consequences;
(c)
provide for specified classes of property (including securities), rights or
liabilities to be treated, or not treated, in a specified way;
35
(d)
withdraw or restrict a relief;
(e)
extend, restrict or otherwise modify a charge to tax;
(f)
provide for matters to be determined by the Treasury in accordance
with provision made by or in accordance with the regulations.
(5)
Regulations may make provision for the fiscal consequences of the exercise of
40
a stabilisation power in respect of things done—
(a)
during the period of three months before the date on which the
stabilisation power is exercised, or