Bank Resolution (Recapitalisation) Act 2025

2025 Chapter 15

An Act to make provision about recapitalisation costs in relation to the special resolution regime under the Banking Act 2009.

Enacted [15th May 2025]

Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

^I1^I91 Recapitalisation payments¶

In Part 15 of the Financial Services and Markets Act 2000 (the Financial Services Compensation Scheme), after section 214D insert—

214E Recapitalisation payments

1 The Bank of England may require the scheme manager to make a recapitalisation payment to the Bank or another person where the Bank has exercised or decided to exercise a stabilisation power under Part 1 of the Banking Act 2009 in respect of a financial institution so as to achieve—

a a sale of the institution to a private sector purchaser (see section 11 of that Act), or

b a transfer of the institution to a bridge bank (see section 12 of that Act).

2 A recapitalisation payment is a payment in respect of the Bank’s estimate of—

a the costs likely to be required for the recapitalisation of the financial institution, and

b any other expenses that the Bank or a relevant person has incurred or might incur in connection with the recapitalisation of the institution or the exercise of the stabilisation power.

3 Before exercising the power in subsection (1), the Bank must consult the scheme manager.

4 A recapitalisation payment made by the scheme manager under subsection (1) is to be treated for the purposes of this Part as an expense under the compensation scheme.

5 In subsection (2)(b), “relevant person” means—

a the Treasury,

b a bridge bank, or

c an asset management vehicle.

6 In this section, “bridge bank” and “asset management vehicle” have the meanings given by sections 12 and 12ZA, respectively, of the Banking Act 2009.

7 In this section and in section 214H, “financial institution” means a bank, building society or investment firm (within the meanings of Part 1 of the Banking Act 2009).

^I2^I102 Reporting¶

In Part 15 of the Financial Services and Markets Act 2000, after section 214E (as inserted by section 1 of this Act) insert—

214F Recapitalisation payment: report

1 This section applies where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E.

2 The Bank must report to the Chancellor of the Exchequer about—

a the exercise of the power to require a recapitalisation payment to be made, and

b the stabilisation power and the stabilisation option to which the payment relates.

3 The report (“the final report”) must—

a comply with such requirements as to content, and

b be provided within such period or at such time,

as the Treasury may specify.

4 The Bank must provide an interim report if—

a the period specified under subsection (3)(b) is a period of more than 3 months beginning with the day on which the Bank requires the recapitalisation payment in question (“the first 3 months”), or the time specified under subsection (3)(b) is after the first 3 months, and

b the Bank does not provide the final report within the first 3 months.

5 An interim report must—

a comply with such requirements as to content as the Treasury may specify, and

b be provided within the first 3 months.

6 Subject to subsection (7), the Chancellor of the Exchequer must lay each report, and any interim report, before Parliament.

7 The Chancellor of the Exchequer may omit from the report, and any interim report, any information which the Chancellor of the Exchequer considers it would not be in the public interest to publish.

^I3^I113 Notification to Parliamentary Committees¶

In Part 15 of the Financial Services and Markets Act 2000, after section 214F (as inserted by section 2 of this Act) insert—

214G Notification to Parliamentary Committees

1 Where the Bank of England requires the scheme manager to make a recapitalisation payment under section 214E, the Bank must, as soon as reasonably practicable, notify in writing the chair of each relevant Parliamentary Committee that it has done so.

2 The relevant Parliamentary Committees are—

a the Treasury Committee of the House of Commons, and

b the Financial Services Regulation Committee of the House of Lords.

3 A reference to a committee in subsection (2)—

a if the name of that committee is changed, is to be treated as a reference to that committee by its new name, and

b if the functions of that committee (or substantially corresponding functions) become functions of a different committee, is to be treated as a reference to the committee by which those functions are exercisable.

4 Any question arising under subsection (3) is to be determined by—

a the Speaker of the House of Commons, in relation to committees of the House of Commons, and

b the Chairman of Committees of the House of Lords, in relation to committees of the House of Lords.

^I4^I124 Reimbursement in respect of recapitalisation payments¶

In Part 15 of the Financial Services and Markets Act 2000, after section 214G (as inserted by section 3 of this Act) insert—

214H Reimbursement in respect of a recapitalisation payment

1 The Bank must reimburse the scheme manager for any recapitalisation payment, or any part of a recapitalisation payment, relating to a financial institution, which is not needed to cover the costs and expenses mentioned in section 214E(2)(a) and (b) because—

a those costs and expenses were lower than the Bank expected, or

b the Bank recovers an amount in relation to the financial institution which it can use to defray those costs and expenses.

2 For the purposes of subsection (1)—

a the reference to the Bank recovering an amount in relation to the financial institution includes recovering an amount as a result of the sale of the institution or the institution being wound up or otherwise;

b where more than one recapitalisation payment is required in relation to a financial institution, references to a recapitalisation payment are to be read as references to the sum of those payments;

c the reference to the sale of a financial institution in paragraph (a) is to the sale of all or part of the business of the financial institution as part of, or as a result of, the achievement of a stabilisation option.

^I5^I145 Code of practice¶

In the Banking Act 2009, in section 5 (code of practice), after subsection (2) insert—

^I6^I136 Amendments to the Financial Services and Markets Act 2000¶

1 The Financial Services and Markets Act 2000 is amended as follows.

Amends Financial Services and Markets Act 2000 · 2 insertions

213 The compensation scheme

subsections (1) – (4) unchanged

5 In making any provision of the scheme by virtue of subsection (3)(b), the regulators must take account of the desirability of ensuring that the amount of the levies imposed on a particular class of person are commensurate with the risks that class presents in relation to claims or recapitalisation payments within the meaning of section 214E, as the case may be, made under the scheme.

5A The compensation scheme may not allow the scheme manager to impose levies on credit unions in relation to recapitalisation payments under section 214E.

5B In subsection (5A), the reference to "credit unions" is to credit unions within the meaning of—

a the Credit Unions Act 1979 (see section 31);

b the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)) (see Article 2).

remaining subsections unchanged

2 In section 213 (the compensation scheme)—

a in subsection (5), after “claims” insert “or recapitalisation payments within the meaning of section 214E, as the case may be,”;

b after subsection (5) insert—

Amends Financial Services and Markets Act 2000 · 1 insertion

223 Management expenses

subsections (1) – (2) unchanged

3 "Management expenses" means expenses incurred, or expected to be incurred, by the scheme manager in connection with its functions under this Act other than those incurred—

a in paying compensation;

b as a result of any provision of the scheme made by virtue of section 215A(3) or (4), 216(3) or (4) or 217(1) or (6);

c under section 214B or 214D;

ca under section 214E;

remaining paragraphs unchanged

3 In section 223 (management expenses), in subsection (3), after paragraph (c) insert—

Amends Financial Services and Markets Act 2000 · 1 change

223C Payments in error

1 Payments made by the scheme manager in error may be provided for in setting a levy by virtue of section 213, 214A, 214B, 214E or 223B.

remaining subsections unchanged

4 In section 223C (payments in error), in subsection (1), after “214B” insert “, 214E”.

^I7^I157 Amendments to the Banking Act 2009¶

1 The Banking Act 2009 is amended as follows.

Amends Banking Act 2009 · 1 insertion

3 Interpretation: other expressions

1 In this Part—

other definitions unchanged

"extraordinary public financial support" means—

a State aid within the meaning of the Treaty on the Functioning of the European Union (or equivalent provision in any applicable international agreement); or

b other financial support by a public financial institution, or

c any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E of the Financial Services and Markets Act 2000,

2 In section 3 (interpretation: other expressions), in subsection (1), in the definition of “extraordinary public financial support”—

a omit the “or” at the end of paragraph (a), and

b at the end of paragraph (b) insert

Amends Banking Act 2009 · 1 change

12AA Bail-in: sequence of write-down and conversion of capital instruments and liabilities

subsection (1) unchanged

2 In this section—

other definitions unchanged

"the shortfall amount" means the amount by which the total loss-absorbing capacity of the bank immediately before the bail-in falls short of the recapitalisation amount less the amount of any recapitalisation payment required under section 214E of the Financial Services and Markets Act 2000 in relation to the bank in question.

remaining subsections unchanged

3 In section 12AA (bail-in: sequence of write-down and conversion of capital instruments and liabilities), in subsection (2), in the definition of “the shortfall amount”, at the end insert “less the amount of any recapitalisation payment required under section 214E of the Financial Services and Markets Act 2000 in relation to the bank in question”.

4 In section 15 (share transfer instrument), after subsection (1) insert—

5 In section 57 (valuation principles), after subsection (3) insert—

6 In section 58 (resolution fund), after subsection (2) insert—

7 In section 78A (pre-conditions for financial assistance), at the end insert—

^I88 Extent, commencement and short title¶

1 This Act extends to England and Wales, Scotland and Northern Ireland.

2 Sections 1 to 7 of this Act come into force on such day as the Treasury may by regulations appoint.

3 Regulations under this section are to be made by statutory instrument.

4 This Act may be cited as the Bank Resolution (Recapitalisation) Act 2025.

Footnotes

I1
S. 1 not in force at Royal Assent, see s. 8(2)
I2
S. 2 not in force at Royal Assent, see s. 8(2)
I3
S. 3 not in force at Royal Assent, see s. 8(2)
I4
S. 4 not in force at Royal Assent, see s. 8(2)
I5
S. 5 not in force at Royal Assent, see s. 8(2)
I6
S. 6 not in force at Royal Assent, see s. 8(2)
I7
S. 7 not in force at Royal Assent, see s. 8(2)
I8
S. 8 in force at Royal Assent
I9
S. 1 in force at 16.7.2025 by S.I. 2025/872, reg. 2(a)
I10
S. 2 in force at 16.7.2025 by S.I. 2025/872, reg. 2(b)
I11
S. 3 in force at 16.7.2025 by S.I. 2025/872, reg. 2(c)
I12
S. 4 in force at 16.7.2025 by S.I. 2025/872, reg. 2(d)
I13
S. 6 in force at 16.7.2025 by S.I. 2025/872, reg. 2(f)
I14
S. 5 in force at 16.7.2025 by S.I. 2025/872, reg. 2(e)
I15
S. 7 in force at 16.7.2025 by S.I. 2025/872, reg. 2(g)

Bank Resolution (Recapitalisation) Act 2025

I1I91 Recapitalisation payments¶

I2I102 Reporting¶

I3I113 Notification to Parliamentary Committees¶

I4I124 Reimbursement in respect of recapitalisation payments¶

I5I145 Code of practice¶

I6I136 Amendments to the Financial Services and Markets Act 2000¶

213 The compensation scheme

223 Management expenses

223C Payments in error

I7I157 Amendments to the Banking Act 2009¶

3 Interpretation: other expressions

12AA Bail-in: sequence of write-down and conversion of capital instruments and liabilities

I88 Extent, commencement and short title¶

Footnotes

^I1^I91 Recapitalisation payments¶

^I2^I102 Reporting¶

^I3^I113 Notification to Parliamentary Committees¶

^I4^I124 Reimbursement in respect of recapitalisation payments¶

^I5^I145 Code of practice¶

^I6^I136 Amendments to the Financial Services and Markets Act 2000¶

^I7^I157 Amendments to the Banking Act 2009¶

^I88 Extent, commencement and short title¶