Banking Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Banking Bill

Banking Bill
Part 1 — Special Resolution Regime
38

(b)
on or after that date.
(6)
In relation to the exercise of a supplemental or onward instrument or order
under section 26, 27, 28, 30, 42, 43 or 45, in subsection (5)(a) above “the
stabilisation power” is a reference to the first stabilisation power in connection
with which the supplemental or onward instrument or order is made.
5
(7)
The Treasury may by order amend subsection (2) so as to—
(a)
add an entry, or
(b)
remove an entry.
(8)
Regulations or an order under this section shall be made by statutory
instrument.
10
(9)
Regulations under this section may not be made unless a draft has been laid
before and approved by resolution of the House of Commons.
(10)
An order under this section shall be subject to annulment in pursuance of a
resolution of the House of Commons.
75
Power to change law
15
(1)
The Treasury may by order amend the law for the purpose of enabling the
powers under this Part to be used effectively, having regard to the special
resolution objectives.
(2)
An order may be made—
(a)
for the general purpose of the exercise of powers under this Part,
20
(b)
to facilitate a particular proposed or possible use of a power, or
(c)
in connection with a particular exercise of a power.
(3)
An order under subsection (2)(c) may make provision which has retrospective
effect in so far as the Treasury consider it necessary or desirable for giving
effect to the particular exercise of a power under this Act in connection with
25
which the order is made.
(4)
In subsection (1) “amend the law” means—
(a)
disapply or modify the effect of a provision of an enactment (other than
a provision made by or under this Act), or
(b)
disapply or modify the effect of a rule of law not set out in legislation.
30
(5)
Provision under this section may relate to this Part as it applies—
(a)
to banks,
(b)
to building societies,
(c)
to credit unions (by virtue of section 86), or
(d)
to any combination.
35
(6)
Specific powers under this Part are without prejudice to the generality of this
section.
(7)
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
40
resolution of each House of Parliament.
(8)
But if the Treasury think it necessary to make an order without complying with
subsection (7)(b)—

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Part 1 — Special Resolution Regime
39

(a)
the order may be made,
(b)
the order shall lapse unless approved by resolution of each House of
Parliament during the period of 28 days (ignoring periods of
dissolution, prorogation or adjournment of either House for more than
4 days) beginning with the day on which the order is made,
5
(c)
the lapse of an order under paragraph (b) does not invalidate anything
done under or in reliance on the order before the lapse and at a time
when neither House has declined to approve the order, and
(d)
the lapse of an order under paragraph (b) does not prevent the making
of a new order.
10
Treasury
76
International obligation notice: general
(1)
The Bank of England may not exercise a stabilisation power in respect of a bank
if the Treasury notify the Bank that the exercise would be likely to contravene
an international obligation of the United Kingdom.
15
(2)
A notice under subsection (1)—
(a)
must be in writing, and
(b)
may be withdrawn (generally, partially or conditionally).
(3)
If the Treasury give a notice under subsection (1) the Bank of England must
consider other exercises of the stabilisation powers with a view to—
20
(a)
pursuing the special resolution objectives, and
(b)
avoiding the objections on which the Treasury’s notice was based.
(4)
The Treasury may by notice to the Bank of England disapply subsection (3) in
respect of a bank; and a notice may be revoked by further notice.
77
International obligation notice: bridge bank
25
(1)
This section applies where the Bank of England has transferred all or part of a
bank’s business to a bridge bank.
(2)
The Bank of England must comply with any notice of the Treasury requiring
the Bank, for the purpose of ensuring compliance by the United Kingdom with
its international obligations—
30
(a)
to take specified action under this Part in respect of the bridge bank, or
(b)
not to take specified action under this Part in respect of the bridge bank.
(3)
A notice under subsection (1)—
(a)
must be in writing, and
(b)
may be withdrawn (generally, partially or conditionally).
35
(4)
A notice may include requirements about timing.
78
Public funds: general
(1)
The Bank of England may not exercise a stabilisation power in respect of a bank
without the Treasury’s consent if the exercise would be likely to have
implications for public funds.
40
(2)
In subsection (1)—

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Part 1 — Special Resolution Regime
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(a)
“public funds” means the Consolidated Fund and any other account or
source of money which cannot be drawn or spent other than by, or with
the authority of, the Treasury, and
(b)
action has implications for public funds if it would or might involve or
lead to a need for the application of public funds.
5
(3)
The Treasury may by order specify considerations which are to be, or not to be,
taken into account in determining whether action has implications for public
funds for the purpose of subsection (1).
(4)
If the Treasury refuse consent under subsection (1), the Bank of England must
consider other exercises of the stabilisation powers with a view to—
10
(a)
pursuing the special resolution objectives, and
(b)
avoiding the objections on which the Treasury’s refusal was based.
(5)
The Treasury may by notice to the Bank of England disapply subsection (4) in
respect of a bank; and a notice may be revoked by further notice.
(6)
An order under subsection (3)—
15
(a)
shall be made by statutory instrument, and
(b)
shall be subject to annulment in pursuance of a resolution of the House
of Commons.
79
Public funds: bridge bank
(1)
This section applies where the Bank of England has transferred all or part of a
20
bank’s business to a bridge bank.
(2)
The Bank of England may not take action in respect of the bridge bank without
the Treasury’s consent if the action would be likely to have implications for
public funds.
(3)
Section 78(2) and (3) have effect for the purposes of this section.
25
80
Bridge bank: report
(1)
Where the Bank of England transfers all or part of a bank’s business to a bridge
bank, the Bank must report to the Chancellor of the Exchequer about the
activities of the bridge bank.
(2)
The first report must be made as soon as is reasonably practicable after the end
30
of one year beginning with the date of the first transfer to the bridge bank.
(3)
A report must be made as soon as is reasonably practicable after the end of each
subsequent year.
(4)
The Chancellor of the Exchequer must lay a copy of each report under
subsection (2) or (3) before Parliament.
35
(5)
The Bank must comply with any request of the Treasury for a report dealing
with specified matters in relation to a bridge bank.
(6)
A request under subsection (5) may include provision about—
(a)
the content of the report;
(b)
timing.
40

Banking Bill
Part 1 — Special Resolution Regime
41

Building societies, &c.
81
Application of Part 1: general
This Part shall apply to building societies (within the meaning of section 119 of
the Building Societies Act 1986) as it applies to banks, subject to the provisions
of the Table.
5

Section
Topic
Modification or note

11
Private sector
A share transfer instrument may not be made.

purchaser

13
Temporary public
The procedure provided by section 82 has effect in place of share

ownership
transfer orders.

10

14 to 32
Transfer of securities
The procedure provided by section 82 has effect in place of share

transfer orders; and—

(a)
sections 28 and 30 do not apply, and

(b)
section 27 applies following an order under section 82

as following a share transfer order.

15

33
Property transfer
A property transfer instrument in respect of a building society

instrument: nature
may—

(a)
cancel shares in the building society;

(b)
confer rights and impose liabilities in place of cancelled

shares (whether by way of actual or deemed shares in a

20

transferee building society or by way of other rights

and liabilities in relation to a transferee bank).

33 and
Property transfer
A property transfer instrument in respect of a bank which

36
instrument: continuity
provides for transfer to a building society may confer rights and

impose liabilities by way of actual or deemed shares in the

25

building society.

34
Property transfer
A property transfer instrument may, in particular, have effect

instrument: effect
without causing sections 93 to 102D of the Building Societies Act

1986 (mergers and transfers) to apply.

42
Supplemental
A supplemental property transfer instrument in respect of a

30

property transfer
building society may—

instrument
(a)
cancel shares in the building society;

(b)
confer rights and impose liabilities in place of cancelled

shares (whether by way of actual or deemed shares in a

transferee building society or by way of other rights

35

and liabilities in relation to a transferee bank).

45
Temporary public
(a)
Section 45 applies following an order under section 82

ownership: property
as following a share transfer order.

transfer
(b)
A property transfer order in respect of a building

society may cancel shares in the building society.

40

49 to 62
Compensation
(a)
A reference to a share transfer order includes a

reference to an order under section 82.

(b)
A resolution fund order may not be made under

section 51(2)(b).

(c)
If and in so far as an order under section 82 provides

45

for the issue of new deferred shares, section 51(2) shall

not apply.

63 to 75
Incidental functions
A reference to a share transfer order includes a reference to an

order under section 82.