Banking Act 2009

Building societies, &c.U.K.

84Application of Part 1: generalU.K.

[F1This Part applies to building societies (within the meaning of section 119 of the Building Societies Act 1986) as it applies to banks, subject to—

(a)the provisions of the Table, and

(b)sections [F284ZA] to 84D (which relate to the [F3second and fourth stabilisation options] ).]

[F684ZABridge bank: share transfer instrumentsU.K.

(1)This section applies for the purpose of the exercise of the second stabilisation option (transfer to a bridge bank) in relation to a building society.

(2)A share transfer instrument made under section 12(2)(a) may—

(a)convert the building society into a company (“the successor company”), and

(b)make other provision for the purposes of, or in connection with the conversion of the building society.

(3)The provision which may be made under subsection (2)(b) includes—

(a)provision cancelling shares in the building society;

(b)provision cancelling membership rights in the building society;

(c)provision converting shares in the building society into deposits with the successor company;

(d)provision conferring rights and imposing liabilities in place of cancelled shares and membership rights;

(e)provision requiring the FCA to cancel the building society's registration under the Building Societies Act 1986 at a time specified in or determined in accordance with the instrument;

(f)provision that any person approved for the purposes of Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) in relation to the building society immediately before the share transfer instrument is made continues to be approved for those purposes in relation to the successor company (but without affecting the power of the FCA or the PRA to vary or withdraw an approval);

(g)provision for the successor company on its incorporation to be wholly owned by a bridge bank specified in the instrument (the “parent undertaking”);

(h)where provision is made under paragraph (g), provision—

(i)for the transfer of liabilities from the successor company to the parent undertaking, and for the creation of corresponding liabilities of the successor company to the parent undertaking;

(ii)replacing a liability (of any form) of the building society or the successor company with a liability or security (of any form or class) of the parent undertaking.

(4)Section 15 (share transfer instruments) is to be read as if the provision referred to in subsection (1) of that section included the provision referred to in subsections (2) and (3) of this section.]

[F784A.Bail-in option: building societiesU.K.

(1)This section applies for the purpose of the exercise of the fourth stabilisation option (bail-in) in relation to a building society.

(2)Subsection (2A) of section 12A (bail-in option) is to be read as if the provision referred to included provision under this section.

(3)Subsection (1) of section 12AA (bail-in: sequence of write-down and conversion of capital instruments and liabilities) is to be read as if the powers referred to included the powers conferred by this section, sections 84B and 84C and the provisions modified by section 84D.

(4)A resolution instrument with respect to a building society may make—

(a)provision of the kind mentioned in subsection (5);

(b)other provision for the purposes of, or in connection with, provision of the kind mentioned in subsection (5) made by that or another instrument.

(5)A resolution instrument may—

(a)convert the building society into a company, or

(b)transfer all the property, rights and liabilities of the building society to a company.

(6)In the following provisions of this section, “the successor company”, in relation to a building society, means the company into which the building society is converted, or to which the property, rights and liabilities of the building society are transferred, as a result of provision made under subsection (5).

(7)The provision that may be made under subsection (4)(b) includes—

(a)provision cancelling shares in the building society;

(b)provision cancelling membership rights in the building society;

(c)provision converting shares in the building society into deposits with the successor company;

(d)provision conferring rights and imposing liabilities in place of cancelled shares and membership rights;

(e)provision requiring the FCA to cancel the building society’s registration under the Building Societies Act 1986 at a time specified in or determined in accordance with the instrument;

(f)provision that any person approved for the purposes of Part 5 of the Financial Services and Markets Act 2000 (performance of regulated activities) in relation to the building society immediately before the resolution instrument is made continues to be approved for those purposes in relation to the successor company (but without affecting the powers of the FCA or PRA to vary or withdraw an approval);

(g)provision which could be included in a property transfer instrument by virtue of—

(i)section 34(7) and (8) (property held on trust), or

(ii)section 36(1) to (5) (continuity).

(8)The provision that may be made under subsection (4)(b) also includes—

(a)in a case where the resolution instrument makes provision under subsection (5)(a), provision for the successor company on its incorporation to be wholly owned by a company specified in the instrument;

(b)in a case where the resolution instrument makes provision under subsection (5)(b) transferring the property, rights and liabilities of the building society to a company which is wholly owned by another company, provision relating to that other company;

(c)in either case, provision—

(i)for the transfer of liabilities from the successor company to the other company mentioned in paragraph (a) or (b) (“the parent undertaking”), and for the creation of corresponding liabilities of the successor company to the parent undertaking;

(ii)replacing a liability (of any form) of the building society or the successor company with a liability or security (of any form or class) of the parent undertaking.

(9)A company may not be specified under subsection (8)(a) unless it is (or is to be) wholly owned by—

(a)the Bank of England,

(b)a resolution administrator appointed under section 62B(1), or

(c)a person nominated by the Bank of England.

(10)Where a resolution instrument makes provision under subsection (5), section 37 (licences) applies as if the references to a property transfer instrument were references to the resolution instrument.

(11)A resolution instrument may provide for different provision made under this section by the instrument to take effect at different times.

(12)In this section—

• “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

• “deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), but ignoring the exclusions in article 6.

84B.Further provision: conversion of building society into companyU.K.

(1)This section applies where

[F8(a)a share transfer instrument makes provision under section 84ZA(2)(a), or

(b)] a resolution instrument makes provision under section 84A(5)(a)

(2)The [F9share transfer instrument or] resolution instrument must—

(a)state the company’s proposed name;

(b)set out the terms of the memorandum of association of the company;

(c)set out the terms of the articles of association of the company (to the extent that these are not to be supplied by the default application of model articles: see section 20 of the Companies Act 2006);

(d)contain the statements and information required to be included in or to accompany an application for a certificate under section 761 of the Companies Act 2006 (public company: requirement as to minimum share capital).

(3)The conversion into the successor company takes effect on the registration of the company under the Companies Act 2006.

(4)The successor company is to be treated as the same person in law as the building society.

(5)The documents required by section 9 of the Companies Act 2006 (registration documents) to be delivered to the registrar (within the meaning of that Act) include a copy of the [F10share transfer instrument or] resolution instrument.

(6)In section 13 of the Companies Act 2006 (statement of compliance) and section 14 of that Act (registration), the reference to the requirements of that Act is to be read as a reference to the requirements of that Act as modified by this section.

(7)If the [F11share transfer instrument or] resolution instrument complies with subsection (2)(d), an application for a trading certificate is to be taken to have been made in accordance with section 762 of the Companies Act 2006 (procedure for obtaining trading certificate).

(8)In this section—

• “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

• “the successor company”, in relation to a building society, means the company into which the building society is converted as a result of provision made under section [F1284ZA(2)(a) or] 84A(5)(a).

84C.Further provision: transfer of business of building society to companyU.K.

(1)A transfer under section 84A(5)(b) must be to a company which immediately before the transfer is wholly owned by—

(a)the Bank of England,

(b)a resolution administrator appointed under section 62B(1),

(c)a person nominated by the Bank of England, or

(d)a company which is itself wholly owned by a person within paragraphs (a) to (c).

(2)Where a resolution instrument has made provision under section 84A(5)(b), the building society is dissolved at such time as may be specified in or determined in accordance with the instrument.

(3)In this section, “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares.

84D. [F13Transfer to a bridge bank or] Bail-in option: modifications of this Act and other legislationU.K.

[F14(A1)Where a share transfer instrument makes provision under section 84ZA(2) with respect to a building society, the second stabilisation option is to be exercised by making (in that or a subsequent share transfer instrument) provision under section 12(2)(a)—

(a)with respect to the successor company, or

(b)where provision made under section 84ZA includes provision under subsection (3)(g) of that section, with respect to the successor company or its specified parent undertaking.]

(1)Where a resolution instrument makes provision under section 84A(5) with respect to a building society, the exercise of the fourth stabilisation option involves the making (in that or a subsequent resolution instrument) of provision or proposals of any kind mentioned in section 12A(3) to (6)—

(a)with respect to the successor company, or

(b)where provision made under section 84A includes provision under subsection (8) of that section, with respect to the successor company or its specified parent undertaking.

(2)For the purpose of the making of [F15provision as mentioned in subsection (A1)(a) or (b) or] provision or proposals as mentioned in subsection (1)(a) or (b)—

(a)the Table in section 84 does not apply, and

(b)the provisions in the first column of the following Table apply [F16where relevant] —

(i)in relation to the successor company, or

(ii)in a case within subsection [F17(A1)(b) or] (1)(b), in relation to the successor company or its specified parent undertaking,

as they apply in relation to a bank, but subject to the modifications in the third column of the Table.

(3)Any statutory instrument made under a provision specified in the first column of the Table in subsection (2) applies—

(a)to the successor company, or

(b)in a case within subsection [F25(A1)(b) or] (1)(b), to the successor company or the specified parent undertaking,

as it applies in relation to a bank, but subject to modifications corresponding to those applying to the provision under which it is made and as if references to a provision modified by subsection (2) or (5) were references to that provision as so modified.

(4)Subsection (3) does not apply where the instrument—

(a)states that it does not apply, or

(b)makes express provision about building societies or their successor companies.

(5)Where a resolution instrument makes provision under section 84A in respect of a building society—

(a)section 81BA (groups: bail-in option) applies with the following modifications—

(i)references to a banking group company are to be read as references to a subsidiary of the building society, and

(ii)the power in subsection (1) of that section is to be exercised only where the Bank of England has exercised the stabilisation power in accordance with section 12A(2) in respect of the parent building society;

(b)section 81CA applies as if references to a banking group company were references to a subsidiary of the building society or of the successor company; and

(c)section 81D (interpretation: “banking group company”) does not apply.

[F26(5A)Where—

(a)the third stabilisation option is exercised in connection with the fourth stabilisation option in respect of a building society, and

(b)before the third stabilisation option is exercised—

(i)the building society is converted into a company pursuant to section 84A(5)(a), or

(ii)all the property, rights and liabilities of the building society are transferred to a company pursuant to section 84A(5)(b),

the references to the bank in section 12ZA(1)(a) and any other provision so far as relating to property transfer instruments under section 12ZA include a reference to the successor company.]

(6)Sections 97 to 102D of the Building Societies Act 1986 (transfer of business of building society to commercial company) do not apply where

[F27(a)a share transfer instrument makes provision under section 84ZA, or

(b)] a resolution instrument makes provision under section 84A.

(7)Section 103 of the Building Societies Act 1986 (cancellation of registration) does not apply where

[F28(a)a share transfer instrument makes provision under section 84ZA(3)(e), or

(b)]a resolution instrument makes provision under section 84A(7)(e).

(8)In this section—

• “company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares;

• “specified parent undertaking” means a company by which in accordance with provision falling within [F29paragraph (g) of section 84ZA(3) or] paragraph (a) or (b) of section 84A(8) the successor company is (or is to be) wholly owned;

• “the successor company”, in relation to a building society, means the company into which the building society is converted, or to which the property, rights and liabilities of the building society are transferred, as a result of provision made under section [F3084ZA(2) or] 84A(5).]

85Temporary public ownershipU.K.

(1)For the purpose of exercising the [F31fifth] stabilisation option in respect of a building society the Treasury may make one or more orders for the purposes of—

(a)arranging for deferred shares of a building society to be publicly owned,

(b)cancelling private membership rights in the building society,

(c)allowing the building society to continue in business while in public ownership, and

(d)eventually either winding up or dissolving the building society.

(2)For the purpose specified in subsection (1)(a) an order may—

(a)arrange for the transfer of existing deferred shares;

(b)provide for new deferred shares.

(3)For the purpose of arranging for the transfer of existing deferred shares an order may—

(a)provide for deferred shares to be transferred;

(b)make other provision for the purposes of, or in connection with, the transfer of deferred shares (whether or not the transfer has been or is to be effected by the order, by another order under this section or otherwise);

(c)relate to all or any specified class or description of deferred shares issued by the building society.

(4)For the purpose of providing for new deferred shares an order may—

(a)issue or allow the Treasury to issue new deferred shares on behalf of the building society;

(b)specify or allow the Treasury to specify the terms and effect of new deferred shares;

(c)specify or allow the Treasury to specify the recipient of new deferred shares.

(5)For the purpose specified in subsection (1)(b) an order may—

(a)cancel or permit the cancellation of shares (whether or not deferred) in the building society;

(b)confer rights and impose liabilities, or allow them to be conferred and imposed, in place of cancelled shares;

(c)prevent the issue or acquisition of shares in or other rights in respect of the building society otherwise than in accordance with the order.

(6)For the purpose specified in subsection (1)(c) an order may make any provision which the Treasury think desirable to facilitate the business of the building society after the making of provision in accordance with subsections (3) to (5).

(7)An order in respect of a building society may—

(a)make provision expressly or impliedly disapplying or modifying the memorandum or rules of the building society;

(b)disapply or modify an enactment about, or in its application to, building societies.

(8)The following sections apply to orders under this section as to share transfer orders: sections 17, 18, 20, 21, F32... , 23, 25[F33, 48Z], 71, [F3473 and 83Z2].

86Distribution of assets on dissolution or winding upU.K.

(1)The Treasury may by order make provision about the distribution of surplus assets of a building society which—

(a)is the subject of a property transfer instrument or order, and

(b)is later wound up or dissolved by consent.

(2)An order under section 85 may include provision about the distribution of surplus assets of the building society if it is later wound up or dissolved by consent.

(3)“Surplus” means remaining after the satisfaction of liabilities to creditors and shareholders.

(4)An order under or by virtue of this section—

(a)may include any provision of a kind that may be made by order under section 90B of the Building Societies Act 1986 (power to alter priorities on dissolution or winding up),

(b)may be made whether or not the power under that section has been exercised, and

(c)shall be treated for all procedural purposes in the same way as an order under that section.

87InterpretationU.K.

(1)Expressions used in this group of sections and in the Building Societies Act 1986 have the same meaning in this group of sections as in that Act.

(2)An order under section 119(1) of that Act defining “deferred shares”—

(a)may make special provision for the meaning of that expression in the application of this group of sections, and

(b)shall otherwise apply to this group of sections as to that Act.

88Consequential provisionU.K.

(1)The Treasury may by order make provision, in addition to the provisions of this group of sections, in consequence of the application of this Part to building societies.

(2)An order may, in particular, amend or modify the effect of an enactment (including a fiscal enactment) passed before the commencement of this Part.

(3)An order—

(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.

89Credit unionsU.K.

(1)The Treasury may by order provide for the application of this Part to credit unions (within the meaning of section 31 of the Credit Unions Act 1979) subject to modifications set out in the order.

(2)An order may disapply, modify or apply (with or without modifications) any enactment which relates, or in so far as it relates, to credit unions.

(3)An order—

(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.

(4)Provision made under or by virtue of this Part may make special provision in relation to the application of this Part to credit unions.

(5)In the application of this section to Northern Ireland the reference to section 31 of the Credit Unions Act 1979 is to be treated as a reference to Article 2 of the Credit Unions (Northern Ireland) Order 1985.