C1C2Part 1Special Resolution Regime

Annotations:
Modifications etc. (not altering text)

F2Chapter 3 Special resolution action

Annotations:
Amendments (Textual)
F2

Pt. 1 Ch. 3 formed from ss. 4-83 (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 7

Compensation

I2I160Third party compensation: mandatory provision

1

The Treasury may make regulations about third party compensation arrangements in the case of partial property transfers.

2

In making regulations the Treasury shall, in particular, have regard to the desirability of ensuring that if a residual bank enters insolvency after transfer, pre-transfer F4shareholders or creditors do not receive less favourable treatment than they would have received had it entered insolvency immediately before transfer.

3

In subsection (2)—

a

residual bank” means a bank that is a transferor under a property transfer instrument,

b

pre-transfer F1shareholder or creditor” means a person who—

i

F3holds securities issued by, or is a creditor of, a residual bank immediately before a property transfer instrument takes effect, and

ii

satisfies conditions specified by the regulations, and

c

the reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) a composition with creditors, and (vii) a scheme of arrangement.

4

The regulations may—

a

require a compensation scheme order or a resolution fund order to include a third party compensation order;

b

require a third party compensation order to include provision of a specified kind or to specified effect;

c

make provision which is to be treated as forming part of a third party compensation order (whether (i) generally, (ii) only if applied, (iii) unless disapplied, or (iv) subject to express modification).

5

Regulations may provide for whether compensation is to be paid, and if so what amount is to be paid, to be determined by reference to any factors or combination of factors; in particular, the regulations may provide for entitlement—

a

to depend in part upon the amounts which are or may be payable under a resolution fund order;

b

to be contingent upon the occurrence or non-occurrence of specified events;

c

to be determined wholly or partly by an independent valuer (within the meaning of sections 54 to 56) appointed in accordance with a compensation scheme order or resolution fund order.

6

Regulations may make provision about payment including, in particular, provision for payments—

a

on account subject to terms and conditions;

b

by instalment.

7

Regulations—

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.