Summary and Overview of the Structure Part 1: Special resolution regime (SRR)
7.Before 2008, the United Kingdom did not have a permanent statutory regime for dealing with failing banks. The Banking (Special Provisions) Act 2008, passed in February of that year, provided the Treasury with powers to facilitate an orderly resolution to maintain financial stability or protect the public interest. However the substantive powers provided by the Act were temporary and lapsed on 20 February 2009, a year after the Act was passed.
8.The Banking Act establishes a permanent special resolution regime (SRR), providing the Authorities with tools to deal with banks that get into financial difficulties. Part 1 describes the special resolution objectives and how the SRR is triggered. It sets out the three stabilisation options of the SRR (transfer to a private sector purchaser, transfer to a bridge bank and transfer to temporary public sector ownership). The stabilisation options are exercised through the stabilisation powers, which are the powers to effect the transfer of shares and other securities or property, rights and liabilities, by operation of law. Part 1 also covers the arrangements for assessing such compensation as may be payable to transferors for the shares or other property transferred and for other (third) parties affected by a transfer. Part 1 also includes a power to take bank holding companies into temporary public ownership if certain conditions are met. The application of the SRR to building societies is also set out along with a power to apply the SRR to credit unions.