EXPLANATORY NOTE
(This note is not part of the Order)
This Order is made under the Banking (Special Provisions) Act 2008 (c.2) (“the 2008 Act”) and provides for Bradford & Bingley plc (“Bradford & Bingley”) to be transferred to the Treasury (“the first transfer) and for certain property, rights and liabilities to be transferred immediately thereafter to Abbey National plc (“Abbey”).
The first transfer is given effect by article 3, which transfers shares in Bradford & Bingley to the Treasury Solicitor as nominee for the Treasury. The effect of this is that Bradford & Bingley is wholly owned by the Treasury.
Article 4 ensures that the share transfer is duly registered and that the rights attaching to the shares are enjoyed from the time the transfer takes effect.
Article 5 extinguishes rights and entitlements to receive further shares.
Article 6 modifies rights associated with dated subordinated notes issued by Bradford & Bingley.
Article 7 modifies rights relating to certain instruments in relation to consequences which might otherwise follow from the first transfer.
While Bradford and Bingley is wholly owned by the Treasury, Article 8 disapplies provisions which would otherwise require Bradford and Bingley to have at least two members.
Article 9 modifies the law in relation to resolutions and meetings.
Articles 10 and 11 make provision concerning the removal and appointment of directors, to enable the Treasury as owner of Bradford & Bingley to remove and appoint directors and make related arrangements about service contracts.
Article 12 waives directors’ liability for the period when Bradford & Bingley is owned by the Treasury. The Treasury can disapply this waiver.
Article 13 provides that Ministers, the Treasury, the Bank of England and their employees and representatives are not regarded as shadow directors or persons discharging managerial responsibilities in respect of Bradford & Bingley or any of its UK subsidiary undertakings.
Article 14 discontinues the listing of Bradford & Bingley shares.
Article 15 deems certain requirements imposed on Bradford & Bingley and its UK subsidiary undertakings to be met in respect of their directors and chief executives while Bradford & Bingley is owned by the Treasury.
Article 16 provides for the transfer of certain property, rights and liabilities of Bradford and Bingley to Abbey (the second transfer). The property, rights and liabilities transferred under the Order are set out in Schedule 2.
Article 17 requires Bradford & Bingley to transfer shares in Bradford & Bingley International Limited, a company registered in the Isle of Man, company number 052221C">Bradford & Bingley International (an Isle of Man subsidiary) to Abbey.
The remainder of the articles in Part 5 make further provision in relation to the second transfer, including in relation to pensions, foreign property, consents to the transfer and the interests, rights and liabilities of third parties relating to the property, rights and liabilities transferred.
Part 6 provides for the interaction of the second transfer with the Financial Services Compensation Scheme.
Article 28 provides for payments to Abbey by the FSCS and the Treasury.
Article 29 provides that, for the purpose of the provisions which govern the scheme (the relevant provisions of the Financial Services and Markets Act 2000 and the relevant sections of the FSA Handbook), the payments made by the FSCS under article 28 constitute the payment of compensation to each qualifying claimant under the Financial Services Compensation Scheme.
Article 30 provides that Bradford and Bingley is liable to the FSCS in respect of an amount equal to the aggregate amount of liabilities of the FSCS and the Treasury to Abbey under article 28. The article also makes provision in relation to the FSCS’s recovery of sums from Bradford and Bingley and for its accounting of a proportion of that recovery to the Treasury and related matters.
Part 7 makes provision in relation to the continuation by Abbey of the deposit taking business transferred under article 16. In particular, it requires the provision of services by Bradford & Bingley for a transitional period of 18 months following the second transfer and for there to be no termination or modification of certain contracts and agreements necessary for the carrying on of that business.
Part 8 contains supplementary provisions.
An Impact Assessment of the effect of this instrument on the costs to business has been prepared. It may be obtained from the Financial Stability Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ. It is also available on HM Treasury’s website (www.hm-treasury.gov.uk). Copies of the document have been placed in the libraries of both Houses of Parliament.