(1) A share transfer order—
(a) shall be made by statutory instrument, and
(b) shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(2) As soon as is reasonably practicable after making a share transfer order in respect of a bank the Treasury shall send a copy to—
(a) the bank,
(b) the Bank of England,
(c) the PRA,
(ca) the FCA, and
(d) any other person specified in the code of practice under section 5.
(3) As soon as is reasonably practicable after making a share transfer order the Treasury shall publish a copy—
(a) on the Treasury's internet website, ...
(b) in two newspapers, chosen by the Treasury to maximise the likelihood of the instrument coming to the attention of persons likely to be affected, and
(c) if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),
and arrange for the publication of a copy on the internet website of the bank in respect of which the order was made.
(1) This section applies where the Bank of England has made a share 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 share transfer instruments.
(3) A supplemental share transfer instrument is a share transfer instrument which—
(a) provides for the transfer of securities which were issued by the bank before the original instrument and have not been transferred by the original instrument or another supplemental share transfer instrument;
(a) makes provision of a kind that a share transfer instrument may make under section 15(1)(b) (whether or not in connection with a transfer under the original instrument).
(4) Sections 7 and 8 do not apply to a supplemental share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).
(5) Before making a supplemental share transfer instrument the Bank of England must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Treasury.
(6) The possibility of making a supplemental share 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).
(1) This section applies where the Bank of England has made a share transfer instrument, in respect of securities issued by a bank, in accordance with section 12(2) (“the original instrument”).
(2) The Bank of England may make one or more onward share transfer instruments.
(3) An onward share transfer instrument is a share transfer instrument which—
(a) provides for the transfer of—
(i) securities which were issued by the bank before the original instrument and have been transferred by the original instrument or a supplemental share transfer instrument, or
(ii) securities which were issued by the bank after the original instrument;
(b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).
(4) An onward share transfer instrument may not transfer securities to the transferor under the original instrument.
(5) Sections 7 and 8 do not apply to an onward share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).
(6) Before making an onward share transfer instrument the Bank must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 26 applies where the Bank of England has made an onward share transfer instrument.
(1) This section applies where the Bank of England has made a share transfer instrument in accordance with section 11(2) (“the original instrument”) or 12(2) providing for the transfer of securities issued by a bank to a person (“the original transferee”).
(2) The Bank of England may make one or more ... reverse share transfer instruments in respect of securities issued by the bank and held by the original transferee.
(2A) If the Bank of England makes an onward share transfer instrument in respect of securities transferred by the original instrument, the Bank may make one or more reverse share transfer instruments in respect of securities issued by the bank and held by a transferee under the onward share transfer instrument (“the onward transferee”).
(3) A ... reverse share transfer instrument is a share transfer instrument which—
(a) provides for transfer to the transferor under the original instrument (where subsection (2) applies);
(ab) provides for transfer to the original transferee (where subsection (2A) applies);
(b) makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a) or (ab).
(4) The Bank of England must not make a ... reverse share transfer instrument under subsection (2) without the written consent of the original transferee.
(4A) The Bank of England must not make a reverse share transfer instrument under subsection (2A) unless—
(a) the onward transferee is—
(i) a company wholly owned by the Bank of England,
(ii) a company wholly owned by the Treasury, or
(iii) a nominee of the Bank of England or the Treasury, or
(b) the reverse share transfer instrument is made with the written consent of the onward transferee.
(5) Sections 7, 8 and 50 do not apply to a ... reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Part).
(6) Before making a ... reverse share transfer instrument the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 26 applies where the Bank of England has made a ... reverse share transfer instrument.
(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 original order”).
(2) The Treasury may make one or more supplemental share transfer orders.
(3) A supplemental share transfer order is a share transfer order which—
(a) provides for the transfer of securities which were issued by the bank before the original order and have not been transferred by the original order or another supplemental share transfer order;
(b) makes provision of a kind that a share transfer order may make under section 16(1)(b), whether in connection with a transfer under the original order or in connection with a transfer under that or another supplemental order.
(4) Sections 7 and 9 do not apply to a supplemental share transfer order (but it is to be treated in the same way as any other share transfer order for all other purposes, including for the purposes of the application of a power under this Part).
(5) Before making a supplemental share transfer order the Treasury must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Bank of England.
(6) The possibility of making a supplemental share transfer order in reliance on subsection (2) is without prejudice to the possibility of making of a new order in accordance with section 13(2) (and not in reliance on subsection (2) above).
(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 original order”).
(2) The Treasury may make one or more onward share transfer orders.
(3) An onward share transfer order is a share transfer order which—
(a) provides for the transfer of—
(i) securities which were issued by the bank before the original order and have been transferred by the original order or a supplemental share transfer order, or
(ii) securities which were issued by the bank after the original order;
(b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the bank (whether the transfer has been or is to be effected by that order, by another share transfer order or otherwise).
(4) An onward share transfer order may not transfer securities to the transferor under the original order.
(5) Sections 7 and 9 do not apply to an onward share transfer order (but it is to be treated in the same way as any other share transfer order for all other purposes, including for the purposes of the application of a power under this Part).
(6) Before making an onward share transfer order the Treasury must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Bank of England.
(7) Section 27 applies where the Treasury have made an onward share transfer order.
(1) This section applies where the Treasury have made a share transfer order in accordance with section 13(2) (“the original order”) providing for the transfer of securities issued by a bank to a person (“the original transferee”).
(2) The Treasury may make one or more reverse share transfer orders in respect of securities issued by the bank and held by the original transferee (whether or not they were transferred by the original order).
(3) If the Treasury makes an onward share transfer order in respect of securities transferred by the original order, the Treasury may make one or more reverse share transfer orders in respect of securities issued by the bank and held by a transferee under the onward share transfer order (“the onward transferee”).
(4) A reverse share transfer order is a share transfer order which—
(a) provides for transfer to the transferor under the original order (where subsection (2) applies);
(b) provides for transfer to the original transferee (where subsection (3) applies);
(c) makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a) or (b).
(4A) The Treasury must not make a reverse share transfer order under subsection (3) unless—
(a) the onward transferee is—
(i) a company wholly owned by the Bank of England,
(ii) a company wholly owned by the Treasury, or
(iii) a nominee of the Treasury, or
(b) the reverse share transfer order is made with the written consent of the onward transferee.
(5) Sections 7, 9 and 51 do not apply to a reverse share transfer order (but it is to be treated in the same way as any other share transfer order for all other purposes including for the purposes of the application of a power under this Part).
(6) Before making a reverse share transfer order the Treasury must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Bank of England.
(7) Section 27 applies where the Treasury have made a reverse share transfer order.
(1) This section applies where the Bank of England has made—
(a) a property transfer instrument in respect of a resolution company in accordance with section 12(2) or 12ZA(3), or
(b) a share transfer instrument in respect of a resolution company in accordance with section 12(2).
(2) The Bank of England may make one or more resolution company share transfer instruments.
(3) A resolution company share transfer instrument is a share transfer instrument which—
(a) provides for securities issued by the resolution company to be transferred;
(b) makes other provision for the purposes of, or in connection with, the transfer of securities issued by the resolution company (whether the transfer has been or is to be effected by that instrument, by another share transfer instrument or otherwise).
(4) Sections 7 and 8 do not apply to a resolution company share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes, including for the purposes of the application of a power under this Part).
(5) Before making a resolution company share transfer instrument the Bank of England must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Treasury.
(6) Section 26 applies where the Bank of England has made a resolution company share transfer instrument.
(1) This section applies where the Bank of England has made a resolution company share transfer instrument in accordance with section 30(2) (“the original instrument”) ...
(2) The Bank of England may make one or more resolution company reverse share transfer instruments in respect of securities issued by the resolution company and held by a transferee under the original instrument.
(3) A resolution company reverse share transfer instrument is a share transfer instrument which—
(a) provides for transfer to the transferor under the original instrument;
(b) makes other provision for the purposes of, or in connection with, the transfer of securities which are, could be or could have been transferred under paragraph (a).
(3A) The Bank of England must not make a resolution company reverse share transfer instrument unless—
(a) the transferee under the original instrument is—
(i) a company wholly owned by the Bank of England,
(ii) a company wholly owned by the Treasury, or
(iii) a nominee of the Treasury, or
(b) the resolution company reverse share transfer instrument is made with the written consent of the transferee under the original instrument.
(4) Sections 7, 8 and 51 do not apply to a resolution company reverse share transfer instrument (but it is to be treated in the same way as any other share transfer instrument for all other purposes including for the purposes of the application of a power under this Part).
(5) Before making a resolution company reverse share transfer instrument the Bank of England must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Treasury.
(6) Section 26 applies where the Bank of England has made a resolution company reverse share transfer instrument.
In this group of sections—
“service contract” has the meaning given by section 227 of the Companies Act 2006, and
“transfer date” means the date or time on or at which a share transfer instrument or order (or the relevant part of it) takes effect.
(1) A property transfer instrument is an instrument which—
(a) provides for property, rights or liabilities of a specified bank to be transferred;
(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of a specified bank (whether the transfer has been or is to be effected by that instrument, by another property transfer instrument or otherwise).
(2) A property transfer instrument may relate to—
(a) all property, rights and liabilities of the specified bank,
(b) all its property, rights and liabilities subject to specified exceptions,
(c) specified property, rights or liabilities, or
(d) property, rights or liabilities of a specified description.
(3) In this section references to a bank include a resolution company (whether or not it is a bank).
(1) In this section “transfer” means a transfer provided for by a property transfer instrument.
(2) A transfer takes effect by virtue of the instrument (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.
(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).
(5) A property transfer instrument may provide for a transfer to be conditional upon a specified event or situation—
(a) occurring or arising, or
(b) not occurring or arising.
(6) A property transfer instrument may include provision dealing with the consequences of breach of a condition imposed under subsection (5); and the consequences may include—
(a) automatic vesting in the original transferor;
(b) an obligation to effect a transfer back to the original transferor, with specified consequences for failure to comply (which may include provision conferring a discretion on a court or tribunal);
(c) provision making a transfer or anything done in connection with a transfer void or voidable.
(7) Where a property transfer instrument makes provision in respect of property held on trust (however arising) it may also make provision about—
(a) the terms on which the property is to be held after the instrument takes effect ..., and
(b) how any powers, provisions and liabilities in respect of the property are to be exercisable or have effect after the instrument takes effect.
(8) Provision under subsection (7)(a) may remove or alter the terms of the trust on which the property is held only to the extent that the Bank of England thinks it necessary or expedient for the purpose of transferring—
(a) the legal or beneficial interest of the transferor in the property;
(b) any powers, rights or obligations of the transferor in respect of the property.
(9) In subsection (8) references to the transferor are references to the transferor under the property transfer instrument.
(1) A property transfer instrument may transfer any property, rights or liabilities including, in particular—
(a) property, rights and liabilities acquired or arising between the making of the instrument and the transfer date,
(b) rights and liabilities arising on or after the transfer date in respect of matters occurring before that date,
(c) property outside the United Kingdom,
(d) rights and liabilities under the law of a country or territory outside the United Kingdom (including under legislation of the European Union), and
(e) rights and liabilities under an enactment ....
(2) Section 32 applies for the interpretation of this section (with the necessary modification).
(1) A property transfer instrument may provide—
(a) for a transfer to be, or to be treated as, a succession;
(b) for a transferee to be treated for any purpose connected with the transfer as the same person as the transferor.
(2) A property transfer instrument may provide for agreements made or 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 property transfer instrument 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 be continued by or in relation to the transferee.
(4) A property transfer instrument which transfers or enables the transfer of a contract of employment may include provision about continuity of employment.
(5) A property transfer instrument may modify references (express or implied) in an instrument or document to a transferor.
(6) In so far as rights and liabilities in respect of anything transferred are enforceable after transfer, a property transfer instrument may provide for apportionment between transferor and transferee to a specified extent and in specified ways.
(7) A property transfer instrument may enable the transferor and transferee by agreement to modify a provision of the instrument; but a modification—
(a) must achieve a result that could have been achieved by the instrument, and
(b) may not transfer (or arrange for the transfer of) property, rights or liabilities.
(8) A property transfer instrument may require or permit—
(a) a transferor to provide a transferee with information and assistance;
(b) a transferee to provide a transferor with information and assistance.
(9) Section 32 applies for the interpretation of this section (with the necessary modification).
(1) A property transfer instrument may enable the Bank of England—
(a) to remove a director or senior manager of a specified bank;
(b) to vary the service contract of a director or senior manager of a specified bank;
(c) to terminate the service contract of a director or senior manager of a specified bank;
(d) to appoint a director or senior manager of a specified bank.
(2) Subsection (1) also applies to a director or senior manager of any undertaking which is a banking group company in respect of a specified bank.
(3) Appointments under subsection (1)(d) are to be on terms and conditions agreed with the Bank of England.
(4) In this section “senior manager” means a person who—
(a) exercises executive functions within a specified bank or banking group company, and
(b) is responsible, and directly accountable to the directors, for the day to day management of that bank or banking group company.
(5) In this section references to a bank include a resolution company (whether or not it is a bank).
(1) A licence in respect of anything transferred by property transfer instrument shall continue to have effect despite the transfer.
(2) A property transfer instrument may disapply subsection (1) to a specified extent.
(3) Where a licence imposes rights or obligations, a property transfer instrument may apportion responsibility for exercise or compliance between transferor and transferee.
(4) In this section “licence” includes permission and approval and any other permissive document in respect of anything transferred.
(1) This section applies where a property transfer instrument transfers foreign property.
(2) In subsection (1) “foreign property” means—
(a) property outside the United Kingdom, and
(b) rights and liabilities under foreign law.
(3) The transferor and the transferee must each take any necessary steps to ensure that the transfer is effective as a matter of foreign law (if it is not wholly effective by virtue of the property transfer instrument).
(4) Until the transfer is effective as a matter of foreign law, the transferor must—
(a) hold the property or right for the benefit of the transferee (together with any additional property or right accruing by virtue of the original property or right), or
(b) discharge the liability on behalf of the transferee.
(4A) If the Bank of England determines that, in spite of any action taken by the transferee or the transferor, it is not possible for the transfer of certain property to be effective under the law of the jurisdiction where the property is located or (where the property consists of rights or liabilities) the law under which it arises—
(a) subsection (4) ceases to apply, and
(b) the provisions of the property transfer instrument relating to that property are void.
(4B) The Bank must give notice of any determination under subsection (4A) to the transferor and the transferee.
(5) The transferor must meet any expenses of the transferee in complying with this section.
(6) An obligation imposed by this section is enforceable as if created by contract between the transferor and transferee.
(7) The transferor must comply with any directions of the Bank of England in respect of the obligations under subsections (3) and (4); and—
(a) a direction may disapply subsections (3) and (4) to a specified extent, and
(b) obligations imposed by direction are enforceable as if created by contract between the transferor and the Bank of England.
(8) In this section “foreign law” means the law of a country or territory outside the United Kingdom.
39A Banks which are recognised central counterparties
Paragraphs 59, 60 and 108 of Schedule 11 to the Financial Services and Markets Act 2023 (recognised central counterparty rules, membership and recognition) apply in relation to a bank which would be a recognised central counterparty but for paragraph 155(2) of Schedule 11 to that Act (exclusion of banks etc from definition of recognised central counterparty) as they apply in relation to a recognised central counterparty.
(1) A property transfer instrument may provide for the listing of securities, under section 74 of the Financial Services and Markets Act 2000, to be discontinued or suspended.
(2) Where the listing of securities is suspended in accordance with a property transfer instrument, those securities are to be treated for the purposes of section 96 of, and paragraph 23(6) of Schedule 1ZA to, the Financial Services and Markets Act 2000 as still being listed.
(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, cases or circumstances, and
(b) may make different provision for different purposes, cases or circumstances.
(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,
(b) the Treasury,
(c) the PRA,
(ca) the FCA, 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—
(a) on the Bank's internet website, ...
(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, and
(c) if securities issued by the bank have been admitted to trading on a regulated market (within the meaning of section 103(1) of the Financial Services and Markets Act 2000), by means of a regulatory information service (within the meaning of section 313D of that Act),
and arrange for the publication of a copy on the internet website of the bank in respect of which the instrument was made.
(3) Where the Treasury receive a copy of a property transfer instrument under subsection (1) they shall lay a copy before Parliament.
(4) In this section references to a “bank” include a resolution company even if it is not a bank.
41A Transfer of property subsequent to resolution instrument
(1) This section applies where the Bank of England has made a resolution instrument.
(2) The Bank of England may make one or more property transfer instruments in respect of property, rights or liabilities of the bank.
(3) Section 7 does not apply to a property transfer instrument under subsection (2).
(4) Before making a property transfer instrument under subsection (2) the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 11(2) or 12(2), 12ZA(3) or 41A(2) (“the original instrument”).
(2) The Bank of England may make one or more supplemental property transfer instruments.
(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);
(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, 8 and 8ZA do not apply to a supplemental 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 under this Part).
(5) Before making a supplemental property transfer instrument the Bank of England must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Treasury.
(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), 12(2), 12ZA(3) or 41A(2) (and not in reliance on subsection (2) above).
42A Private sector purchaser: reverse property transfer
(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 11(2) (“the original instrument”) providing for the transfer of property, rights or liabilities of a bank to a person (“the original transferee”).
(2) The Bank of England may make one or more private sector reverse property transfer instruments in respect of property, rights or liabilities of the original transferee.
(3) A private sector reverse property transfer instrument is a property transfer instrument which—
(a) provides for transfer to the transferor under the original instrument;
(b) 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 been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).
(4) The Bank of England must not make a private sector reverse property transfer instrument without the written consent of the original transferee.
(5) Sections 7, 8 and 50 do not apply to a private sector 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 under this Part).
(6) Before making a private sector reverse property transfer instrument the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 42 applies where the Bank of England has made a private sector reverse property transfer instrument.
(1) This section applies where the Bank of England has made a property transfer instrument in respect of a resolution company in accordance with section 12(2) or 12ZA(3) (“the original instrument”).
(2) The Bank of England may make one or more onward property transfer instruments.
(3) An onward property transfer instrument is a property transfer instrument which—
(a) provides for property, rights or liabilities of the resolution company to be transferred (whether accruing or arising before or after the original instrument);
(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities of the resolution company (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 liabilities of the resolution company 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, 8ZA and 52 do not apply to an onward property transfer instrument (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—
(a) the PRA,
(aa) the FCA, and
(b) the Treasury.
(8) Section 42 applies where the Bank of England has made an onward property transfer instrument.
(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 12(2) or 12ZA(3) (“the original instrument”) providing for the transfer of property, rights or liabilities to a resolution company.
(2) The Bank of England may make one or more resolution company reverse property transfer instruments in respect of property, rights or liabilities of the resolution company.
(3) If the Bank of England makes an onward property transfer instrument under section 43 the Bank may make one or more resolution company reverse property transfer instruments in respect of property, rights or liabilities of a transferee under the onward property transfer instrument (“the onward transferee”).
(4) A resolution company reverse property transfer instrument is a property transfer instrument which—
(a) provides for transfer to the transferor under the original instrument (where subsection (2) applies);
(b) provides for transfer to the resolution company (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 been transferred under paragraph (a) or (b) (whether the transfer has been or is to be effected by that instrument or otherwise).
(4A) The Bank of England must not make a resolution company reverse property transfer instrument unless—
(a) the onward transferee is—
(i) a company wholly owned by the Bank of England,
(ii) a company wholly owned by the Treasury, or
(iii) a company wholly owned by a nominee of the Treasury, or
(b) the resolution company reverse property transfer instrument is made with the written consent of the onward transferee.
(5) Sections 7, 8, 8ZA and 52 do not apply to a resolution company 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 under this Part).
(6) Before making a resolution company reverse property transfer instrument the Bank of England must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Treasury.
(7) Section 42 applies where the Bank of England has made a resolution company reverse property transfer instrument.
(1) This section applies where the Bank of England has made a property transfer instrument in accordance with section 41A(2) (“the original instrument”).
(2) The Bank of England may make one or more bail-in reverse property transfer instruments in respect of property, rights or liabilities of the transferee under the original instrument.
(3) A bail-in reverse property transfer instrument is a property transfer instrument which—
(a) provides for a transfer to the transferor under the original instrument;
(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, or could be or could have been, transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).
(4) The Bank of England may make a bail-in reverse property transfer instrument only with the written consent of the transferee under the original instrument.
(5) Section 7 does not apply to a bail-in 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 under this Part).
(6) Before making a bail-in reverse property transfer instrument the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 42 (supplemental instruments) applies where the Bank of England has made a bail-in reverse property transfer instrument.
44B Property transfer instruments: special bail-in provision
(1) A property transfer instrument within subsection (2) may make special bail-in provision with respect to the bank (see section 48B) .
(2) The instruments referred to in subsection (1) are—
(a) a property transfer instrument under section 11(2), 12(2), 12ZA(3) or 41A(2),
(b) a supplemental property transfer instrument under section 42 in relation to which the original instrument is—
(i) a property transfer instrument under section 11(2), 12(2), 12ZA(3) or 41A(2),
(ii) an onward property transfer instrument under section 43(2), or
(iii) a bridge bank supplemental property transfer instrument under section 44D(2),
(c) an onward property transfer instrument under section 43(2), or
(d) a bridge bank supplemental property transfer instrument under section 44D(2).
(3) In the case of—
(a) a property transfer instrument under section 12(2) or 12ZA(3),
(b) a supplemental property transfer instrument under section 42 in relation to which the original instrument is—
(i) a property transfer instrument under section 12(2) or 12ZA(3),
(ii) an onward property transfer instrument under section 43(2), or
(iii) a bridge bank supplemental property transfer instrument under section 44D(2),
(c) an onward property transfer instrument under section 43(2), or
(d) a bridge bank supplemental property transfer instrument under section 44D(2),
the power under subsection (1) to make the provision described in section 48B(1)(b) (see also rule 3(a) and (b) of section 48B(5)) includes power to make the provision referred to in subsection (3A).
(3A) The provision referred to in subsection (3) is provision replacing a liability (of any form)—
(a) of the bank, in the case of the instruments within subsection (3)(a) and (b)(i),
(b) of the resolution company mentioned in section 43(1), in the case of the instruments within subsections (3)(b)(ii) and (c), or
(c) of the bridge bank mentioned in section 44D(1), in the case of the instruments within subsections (3)(b)(iii) and (d),
with a relevant security (of any form or class).
(3B) The following are relevant securities for the purpose of subsection (3A)—
(a) in any case, a security of the bank,
(b) where the instrument within subsection (3)(a), or the original instrument, is made under section 12, a security of the bridge bank mentioned in section 12(1),
(c) where the instrument within subsection (3)(a), or the original instrument, is made under section 12ZA, a security of the asset management vehicle mentioned in section 12ZA(1).
(3C) In subsection (3B) references to the original instrument are—
(a) in relation to an instrument within subsection (3)(b), the original instrument referred to in that paragraph,
(b) in relation to an instrument within subsection (3)(c), the original instrument as defined in section 43(1),
(c) in relation to an instrument with subsection (3)(d), the original instrument as defined in section 44D(1).
(4) Where securities of the bridge bank or asset management vehicle (“B”) are, as a result of subsection (3), held by a person other than the Bank of England, that does not prevent B from being regarded for the purposes of this Part (see particularly section 12(1A) and 12ZA(2)) as being wholly owned by the Bank of England, as long as the Bank of England is entitled to exercise, or control the exercise of, voting rights in respect of all the ordinary shares issued by B.
44BA Property transfer instruments and special bail-in provision: supplementary matters
(1) The following provisions apply in relation to a property transfer instrument which makes special bail-in provision under section 44B(1) as they apply in relation to a resolution instrument—
(a) section 48L (powers in relation to securities) ;
(b) section 48O (power to direct directors of the bank);
(c) section 48Q (continuity);
(d) section 48R (execution and registration of instruments);
(e) section 48S (resolution instruments: general matters);
(f) section 48U (supplemental resolution instruments).
(2) In sections 6E(4)(a)(iii) , 48B, 48X(2)(b)(ii) and 48Y(1)(a) and (2)(a) a reference to a resolution instrument includes a reference to a property transfer instrument which makes special bail-in provision under section 44B(1).
(3) Where special bail-in provision is being made in—
(a) a supplemental property transfer instrument under section 42 in relation to which the original instrument is an onward property transfer instrument under section 43(2), or
(b) an onward property transfer instrument under section 43(2),
references in sections 48B (except in subsection (9)), 48L, 48O and 48U to a bank include a resolution company (whether or not it is a bank).
(4) Where subsection (3) applies, the references in section 48B(3) and (9) to a banking group company, or to a banking group company in relation to a bank, are to a banking group company in relation to the bank in respect of which the Bank of England originally exercised a stabilisation power (and not to a banking group company in relation to the resolution company).
(1) This section applies where the Bank of England makes a property transfer instrument containing provision made in reliance on section 44B.
(2) The Bank of England must report to the Chancellor of the Exchequer stating the reasons why that provision was made in the case of the liabilities concerned.
(3) If the provision departs from the insolvency treatment principles, the report must state the reasons why it does so.
(4) The insolvency treatment principles are that where an instrument includes special bail-in provision—
(a) the provision made by the instrument must be consistent with treating all the liabilities of the bank in accordance with the priority they would enjoy on a liquidation, and
(b) any creditors who would have equal priority on a liquidation are to bear losses on an equal footing with each other.
(5) A report must comply with any other requirements as to content that may be specified by the Treasury.
(6) A report must be made as soon as reasonably practicable after the making of the property transfer instrument to which it relates.
(7) The Chancellor of the Exchequer must lay a copy of each report under subsection (2) before Parliament.
44D Bridge bank: supplemental property transfer powers
(1) This section applies where the Bank of England has made a share transfer instrument in accordance with section 12(2) (“the original instrument”) providing for the transfer of securities issued by a bank (“the bank”) to a bridge bank.
(2) The Bank of England may make one or more property transfer instruments in relation to the bank (“bridge bank supplemental property transfer instruments”).
(3) A bridge bank supplemental property transfer instrument is an instrument which—
(a) provides for property, rights or liabilities of the bank to be transferred (whether accruing or arising before or after the original instrument);
(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 instrument or otherwise).
(4) Sections 7 and 8 do not apply to a bridge bank supplemental 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 under this Part).
(5) Before making a bridge bank supplemental property transfer instrument the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(6) The possibility of making a bridge bank supplemental property transfer instrument in reliance on subsection (2) is without prejudice to the possibility of making a property transfer instrument in accordance with section 12(2) (and not in reliance on subsection (2) above).
(7) Section 42 applies where the Bank of England has made a bridge bank supplemental property transfer instrument.
44E Bridge bank: supplemental reverse property transfer powers
(1) This section applies where the Bank of England has made a bridge bank supplemental property transfer instrument in accordance with section 44D (“the original instrument”).
(2) The Bank of England may make one or more reverse property transfer instruments (“bridge bank supplemental reverse property transfer instruments”) in respect of property, rights or liabilities of the transferee under the original instrument.
(3) A bridge bank supplemental reverse property transfer instrument is an instrument which—
(a) provides for transfer to the transferor under the original instrument;
(b) makes other provision for the purposes of, or in connection with, the transfer of property, rights or liabilities which are, could be or could have been transferred under paragraph (a) (whether the transfer has been or is to be effected by that instrument or otherwise).
(4) Sections 7 and 8 do not apply to a bridge bank supplemental 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 under this Part).
(5) The Bank of England must not make a bridge bank supplemental reverse property transfer instrument unless—
(a) the transferee under the original instrument is—
(i) a company wholly owned by the Bank of England,
(ii) a company wholly owned by the Treasury, or
(iii) a nominee of the Treasury, or
(b) it is made with the written consent of the transferee under the original instrument.
(6) Before making a bridge bank supplemental reverse property transfer instrument the Bank of England must consult—
(a) the PRA,
(b) the FCA, and
(c) the Treasury.
(7) Section 42 applies where the Bank of England has made a bridge bank supplemental reverse property transfer instrument.
(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 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);
(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—
(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).
(5A) In the application of section 34(8) by virtue of subsection (5)(b) above, the reference to the Bank of England is to be treated as a reference to the Treasury.
(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 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—
(a) the PRA,
(aa) the FCA, and
(b) the Bank of England.
46 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”) ....
(2) The Treasury may make one or more reverse property transfer orders in 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 transfer of property, rights or liabilities which are, could be or could have been transferred.
(3A) The Treasury must not make a reverse property transfer order unless—
(a) the transferee under the original order is—
(i) a company wholly owned by the Bank of England,
(ii) a company wholly owned by the Treasury, or
(iii) a nominee of the Treasury, or
(b) the reverse property transfer order is made with the written consent of the transferee under the original order.
(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 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).
(5A) In the application of section 34(8) by virtue of subsection (5)(b) above, the reference to the Bank of England is to be treated as a reference to the Treasury.
(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 of England).
(7) Before making a reverse property transfer order the Treasury must consult—
(a) the PRA,
(aa) the FCA, and
(b) the Bank of England.
(8) Section 42 applies where the Treasury have made a reverse property transfer order.
(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.
(1A) In subsection (1) the reference to a “bank” includes a resolution company (even if it is not a bank).
(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;
(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 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—
(a) particular classes of deposit;
(b) particular classes of client assets.
(4) An order may apply to transfers generally or only to transfers—
(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 resolution of each House of Parliament.
(1) In this section—
(a) “security interests” means arrangements under which one person acquires, by way of security, an actual or contingent interest in the property of another,
(b) “title transfer collateral arrangements” are arrangements under which Person 1 transfers assets to Person 2 on terms providing for Person 2 to transfer assets if specified obligations are discharged,
(c) “set-off” arrangements are arrangements under which two or more debts, claims or obligations can be set off against each other,
(d) “netting arrangements” are arrangements under which a number of claims or obligations can be converted into a net claim or obligation and include, in particular, “close-out” netting arrangements, under which actual or theoretical debts are calculated during the course of a contract for the purpose of enabling them to be set off against each other or to be converted into a net debt, and
(e) “protected arrangements” means security interests, title transfer collateral arrangements, set-off arrangements and netting arrangements.
(2) The Treasury may by order—
(a) restrict the making of partial property transfers in cases that involve, or where they might affect, protected arrangements;
(b) impose conditions on the making of partial property transfers in cases that involve, or where they might affect, protected arrangements;
(c) require partial property transfers to include specified provision, or provision to a specified effect, in respect of or for purposes connected with protected arrangements;
(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 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 protected arrangements generally or only to arrangements—
(a) of a specified kind, or
(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 protected 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 indications of how they are treated, or are intended to be treated, in commercial practice.
(5) In this section “arrangements” includes arrangements which—
(a) are formed wholly or partly by one or more contracts or trusts;
(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;
(d) involve any number of parties;
(e) operate partly by reference to other arrangements between other parties.
(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.
(1) The provision that may be made by a property transfer instrument or order in reliance on section 33(1)(b), 42(3)(b), 42A(3)(b), 43(3)(b), 44(4)(c), 44A(3)(b), 44D(3)(b), 44E(3)(b), 45(3)(b) or 46(3)(b) includes provision for the creation of liabilities.
(2) The provision may be framed by reference to an agreement which has been or is to be entered into, or anything else which has been or is to be done, by any person (including a person other than the person making the instrument or order).
(1) “Special bail-in provision”, in relation to a bank, means any of the following (or any combination of the following)—
(a) provision cancelling a liability owed by the bank;
(b) provision modifying, or changing the form of, a liability owed by the bank;
(c) provision that a contract under which the bank has a liability is to have effect as if a specified right had been exercised under it.
(2) “Special bail-in provision”, in relation to a bank, also includes any associated provision (see subsection (3)) that the Bank of England may think it appropriate to make in consequence of any provision under subsection (1) that—
(a) is made in the same resolution instrument, or
(b) has been made in another resolution instrument in respect of the bank.
(3) “Associated provision” means provision cancelling or modifying a contract under which a banking group company has a liability.
(4) A power to make special bail-in provision—
(a) may be exercised only for the purpose of, or in connection with, reducing, deferring or cancelling a liability of the bank;
(b) may not be exercised so as to affect any excluded liability.
(5) The following rules apply to the interpretation of subsection (1).
1 The reference to cancelling a liability owed by the bank includes a reference to cancelling a contract under which the bank has a liability.
2 The reference to modifying a liability owed by the bank includes a reference to modifying the terms (or the effect of the terms) of a contract under which the bank has a liability.
3 The reference to changing the form of a liability owed by the bank, includes, for example—
(a) converting an instrument under which the bank owes a liability from one form or class to another,
(b) replacing such an instrument with another instrument of a different form or class, ...
(c) creating a new security (of any form or class) in connection with the modification of such an instrument, or
(d) converting those liabilities into securities issued by a bridge bank or a UK parent undertaking (within the meaning of section 6C(7)).
(6) Examples of special bail-in provision include—
(a) provision that transactions or events of any specified kind have or do not have (directly or indirectly) specified consequences or are to be treated in a specified manner for specified purposes;
(b) provision discharging persons from further performance of obligations under a contract and dealing with the consequences of persons being so discharged.
(7) The form and class of the instrument (“the resulting instrument”) into which an instrument is converted, or with which it is replaced, do not matter for the purposes of paragraphs (a) and (b) of rule 3 in subsection (5); for instance, the resulting instrument may (if it is a security) fall within Class 1 or any other Class in section 14.
(7A) Liabilities of the bank are “excluded liabilities” if they are—
(a) liabilities listed in subsection (8), or
(b) liabilities which the Bank of England has excluded under subsection (10) from the application of special bail-in provision.
(8) The following liabilities of the bank are the excluded liabilities referred to in subsection (7A)(a) —
(a) liabilities representing protected deposits;
(b) any liability, so far as it is secured;
(c) liabilities that the bank has by virtue of holding client assets;
(d) liabilities with an original maturity of less than 7 days owed by the bank to a credit institution or investment firm;
(e) liabilities with a remaining maturity of less than 7 days arising from participation in designated settlement systems and owed to such systems or to operators of, or participants in, such systems;
(ea) liabilities with a remaining maturity of less than 7 days owed by the bank to a recognised central counterparty ... or a third country central counterparty;
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(g) liabilities owed to an employee or former employee in relation to salary or other remuneration, except —
(i) variable remuneration that is not regulated by a collective bargaining agreement, and
(ii) variable remuneration of material risk takers within the meaning of rule 3 of Part 152 (remuneration) of the PRA rulebook (other than persons deemed by virtue of rule 3.2 not to be material risk takers and notified to the PRA in accordance with rule 3.2);
(h) liabilities owed to a pension scheme, except for liabilities owed in connection with variable remuneration of the kind mentioned in paragraph (g)(i) or (ii),
(i) liabilities owed to creditors arising from the provision to the bank of goods or services (other than financial services) that are critical to the daily functioning of the bank's operations.
(j) liabilities owed by the bank to the scheme manager of the FSCS in relation to levies imposed by the scheme manager under section 213(3)(b) of the Financial Services and Markets Act 2000;
(k) liabilities owed by the bank to another bank or a banking group company which (in either case)—
(i) is part of the same resolution group as the bank, and
(ii) is not itself a resolution entity,
where the liabilities do not rank below ordinary non-preferential debts under the hierarchy of claims in normal insolvency proceedings.
(9) The following special rules apply in cases involving banking group companies—
(a) a liability is not within subsection (8)(d) if the credit institution or investment firm to which the liability is owed is a banking group company in relation to the bank (see section 81D);
(b) in subsection (8)(i) the reference to creditors does not include companies which are banking group companies in relation to the bank.
(10) The Bank of England may, in a resolution instrument, exclude any bail-in liability or class of bail-in liabilities from the application of any special bail-in provision in relation to the bank if, and only if, the Bank of England—
(a) thinks the exclusion is justified on one or more of the grounds set out in subsection (12), ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11) The power conferred by subsection (10) may be exercised to exclude only part of a bail-in liability, or part of each of the bail-in liabilities of a particular class; and where it is so exercised that part is treated as a bail-in liability excluded under that subsection and the remainder is treated as an a bail-in liability which has not been so excluded.
(12) The grounds are—
(a) that it is not reasonably possible to give effect to special bail-in provision in relation to the liability or class within a reasonable time;
(b) that the exclusion is necessary and proportionate to achieve the continuity of critical functions and core business lines in a manner that maintains the ability of the bank to continue key operations, services and transactions;
(c) that the exclusion is necessary and proportionate to avoid giving rise to widespread contagion, in particular as regards protected deposits held by natural persons or micro, small and medium-sized enterprises, which would severely disrupt the functioning of financial markets, including financial market infrastructures, in a manner that could cause a serious disturbance to the economy of the United Kingdom;
(d) that the making of special bail-in provision in relation to the liability would cause a reduction in value such that the losses borne by other creditors would be higher than if the liability were excluded.
(13) When deciding whether to exclude liabilities under subsection (10) or (11), the Bank of England must give due consideration to—
(a) the principle that all the liabilities of the bank ought to be treated in accordance with the priority they would enjoy on a liquidation,
(b) the principle that any creditors who would have equal priority on a liquidation ought to bear losses on an equal footing with each other,
(c) the level of loss absorbing capacity that would remain in the bank if the liability or liabilities of a class were wholly or partly excluded, and
(d) the need to maintain adequate resources to deal with the implications for public funds of anything done, in future, in connection with the exercise of one or more of the stabilisation powers.
(13A) The Treasury may by regulations made by statutory instrument make further provision in connection with the exercise of functions under subsection (10) (including provision about further circumstances in which functions under that subsection may or must be exercised).
(13B) Regulations under subsection (13A) may—
(a) amend subsections (12) and (13) by adding any provision;
(b) amend or revoke Commission Delegated Regulation (EU) 2016/860;
(c) amend that Regulation by adding, omitting or varying any provision (pending the revocation of the whole Regulation under paragraph (b).
(13C) A statutory instrument containing regulations under subsection (13A) may not be made unless a draft of the instrument has been laid before and approved by resolution of each House of Parliament.
(14) For the purposes of subsection (12)—
“core business lines” means business lines and associated services which represent material sources of revenue, profit or franchise value for the bank or a group which includes the bank (or in the case of an instrument made in relation to a resolution company, of the resolution company);
“protected deposit” has the meaning given by section 48C, and
“micro, small and medium-sized enterprises” means micro, small and medium-sized enterprises as defined with regard to the annual turnover criterion referred to in Article 2(1) of the Annex to Commission Recommendation 2003/361/EC.
(15) For the purposes of the definition of “core business lines”—
(a) Article 7 of Commission Delegated Regulation (EU) 2016/778 (criteria relating to the determination of core business lines) applies, and
(b) “group” has the meaning given by section 3(2)(b).
(16) The Treasury may by regulations made by statutory instrument specify criteria for the determination of the business lines and associated services referred to in the definition of “core business lines”.
(17) The power conferred by subsection (16) includes—
(a) power to amend or revoke Article 7 of Commission Delegated Regulation (EU) 2016/778; and
(b) power to amend or repeal subsection (15)(a).
(18) A statutory instrument containing regulations under subsection (16) is subject to annulment in pursuance of a resolution of either House of Parliament.