Part 1Special Resolution Regime
Introduction
1Overview
1
The purpose of the special resolution regime for banks is to address the situation where all or part of the business of a bank has encountered, or is likely to encounter, financial difficulties.
2
The special resolution regime consists of—
a
the three stabilisation options,
b
the bank insolvency procedure (provided by Part 2), and
c
the bank administration procedure (provided by Part 3).
3
The three “stabilisation options” are—
a
transfer to a private sector purchaser (section 11),
b
transfer to a bridge bank (section 12), and
c
transfer to temporary public ownership (section 13).
4
Each of the three stabilisation options is achieved through the exercise of one or more of the “stabilisation powers”, which are—
a
the share transfer powers (sections 15, 16, 26 to 31 and 85), and
b
the property transfer powers (sections 33 and 42 to 46).
5
Each of the following has a role in the operation of the special resolution regime—
a
the Bank of England,
b
the Treasury, and
c
the Financial Services Authority.
6
The Table describes the provisions of this Part.
Sections | Topic |
---|---|
Sections 1 to 3 | Introduction |
Sections 4 to 6 | Objectives and code |
Sections 7 to 10 | Exercise of powers: general |
Sections 11 to 13 | The stabilisation options |
Sections 14 to 32 | Transfer of securities |
Sections 33 to 48 | Transfer of property |
Sections 49 to 62 | Compensation |
Sections 63 to 75 | Incidental functions |
Sections 76 to 81 | Treasury |
Sections 82 and 83 | Holding companies |
Sections 84 to 89 | Building societies, &c. |
2Interpretation: “bank”
1
In this Part “bank” means a UK institution which has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on the regulated activity of accepting deposits (within the meaning of section 22 of that Act, taken with Schedule 2 and any order under section 22).
2
But “bank” does not include—
a
a building society (within the meaning of section 119 of the Building Societies Act 1986),
b
a credit union within the meaning of section 31 of the Credit Unions Act 1979, or
c
any other class of institution excluded by an order made by the Treasury.
3
In subsection (1) “UK institution” means an institution which is incorporated in, or formed under the law of any part of, the United Kingdom.
4
Where a stabilisation power is exercised in respect of a bank, it does not cease to be a bank for the purposes of this Part if it later loses the permission referred to in subsection (1).
5
An order under subsection (2)(c)—
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.
6
Section 84 applies this Part to building societies with modifications.
7
Section 89 allows the application of this Part to credit unions.
3Interpretation: other expressions
In this Part—
“the FSA” means the Financial Services Authority, and
“financial assistance” has the meaning given by section 257.