The Banking Act 2009 (Restriction of Partial Property Transfers) Order 2009

Explanatory Note

(This note is not part of the Order)

This Order restricts the making of partial property transfer instruments and orders (“partial property transfers”) under the Banking Act 2009 (c.1) (“the Act”). The Order also makes provision to protect certain interests including security interests, set-off arrangements and netting arrangements.

Article 2 sets out the cases in which the Order applies.

Article 3 provides protection for rights and liabilities under a particular set-off arrangement, netting arrangement or title transfer financial collateral arrangement. Certain rights and liabilities are excluded from these protections including rights and liabilities which relate to a retail deposit or retail liability (as defined in article 1). These protections limit what property may be (or may not be) transferred under a partial property transfer and what provision may be made under the powers conferred by sections 64 to 67 of the Act (“the continuity powers”).

Article 4 provides that a property, rights or liabilities may not be transferred and provision may not be included under the continuity powers, to the extent that to do so would contravene Community law.

Article 5 provides for protections for secured liabilities. These protections limit what property may be (or may not be) transferred under a partial property transfer and what provision may be made under the continuity powers. In particular, article 5 provides that liabilities (whether owed by or to the banking institution) and the benefit of security relating to those liabilities may not be separated by any transfer of the banking institution's property, rights and liabilities.

Article 6 provides for protections for capital market arrangements (within the meaning given by paragraph 1 of Schedule 2A to the Insolvency Act 1986 (c.45)). These protections limit what property may be (or may not be) transferred under a partial property transfer and what provision may be made under the continuity powers.

Article 7 provides for protections for financial markets including the default rules of recognised investment exchanges and recognised clearing houses and market contracts. These protections limit what property may be (or may not be) transferred under a partial property transfer and what provision may be made under the continuity powers.

Article 8 provides for additional limits to apply to reverse property transfers under sections 44 and 46 of the Act. These protections limit what property may be (or may not be) transferred under a reverse transfer.

Article 9 provides that provision may not be made in a partial property transfer for section 38(6) or (7) of the Act (termination rights etc) to apply to certain instruments and arrangements.

Articles 10 to 12 provide for remedies for contraventions of the provisions of the Order.

A full Impact Assessment of the effect that this instrument will have on the costs of business and the voluntary sector has been prepared. It may be obtained from the Banking Reform Team, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ. It is also available on HM Treasury's website (www.hm-treasury.gov.uk) and is annexed to the Explanatory Memorandum published alongside this instrument on the OPSI website (www.opsi.gov.uk).