Commentary Special resolution regime and bank administration
553.Parts 1 to 3 of the Banking Act 2009 make provision for the “special resolution regime” which confers powers on the Bank and the Treasury to effect the transfer of the shares or property, rights and liabilities (“business”) of a bank which has encountered, or is likely to encounter, financial difficulties.
554.There are three “stabilisation options” established in Part 1, available to the authorities enabling: (a) the Bank to transfer the shares or some or all of the business of a bank to a commercial purchaser (section 11); (b) the Bank to transfer some or all of the business of a bank to a “bridge bank” (this is a company wholly owned by the Bank) (section 12); and (c) the Treasury to transfer the securities of a bank into temporary public ownership (section 13). The stabilisation options are effected by an exercise of the “stabilisation powers”: the share transfer powers (sections 14 to 32) and the property transfer powers (sections 33 to 48) which enable the Bank to make “transfer instruments” and the Treasury to make “transfer orders”.
555.Following an initial exercise of a transfer power under the Banking Act 2009, the relevant authority may effect supplemental, onward and reverse transfers (see sections 26 to 31 and 42 to 46). In summary “reverse transfers” can be used to transfer the securities, or property, rights and liabilities from a transferee back to a transferor. For example, where the Bank has transferred property, rights and liabilities from a failing bank to a bridge bank it may transfer some of that business back to the failing bank (it may wish to do this, for example, in order to minimise the need to capitalise a bridge bank with public funds where the assets transferred from the failing bank are found to be significantly impaired).