Bank of England enhances resolution readiness with updated operational guides

Operational guide to transfer resolution
This publication describes how the Bank could execute a transfer resolution, and the operational processes and arrangements that may be involved in this. Skip to main content Opens

Published on 13 April 2026
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Contents
1: Introduction
Purpose of the guide
Resolution regime
Transfer tools
Transfer strategy application
2: Private sector purchaser operational guide
Preparing for a transfer
Auction process
Evaluating the bids
Execution risks in a transfer to a PSP
3: Bridge bank operational guide
The use of the bridge bank tool
Establishment of the bridge bank
Governance arrangements
Authorisation
Accounting treatment
4: Bank Resolution (Recapitalisation) Act 2025 – recapitalisation payment mechanism use cases Key features of the recapitalisation payment mechanism Recapitalisation payments Illustrative use cases Abbreviations and glossary Annexes

1: Introduction
Purpose of the guide
1.1 The purpose of this document is to provide practical information on how the Bank of
England (the Bank) might execute a ‘transfer resolution’, that is to say a transfer of shares or the business of a failed firm to either a private sector purchaser (PSP) or a bridge bank using the Bank’s resolution powers. It focuses on the operational processes and arrangements that may be involved in each scenario.
1.2 It is likely to be of particular interest to those who may be directly affected by or involved
in a transfer. This includes:
1.3 To support understanding and provide a greater degree of transparency regarding how
the Bank might conduct a transfer in practice, we set out a stylised timeline of the actions required to use either the PSP or bridge bank transfer tools:

• firms where transfer is the preferred resolution strategy or firms who are projecting to
  approach the relevant thresholds in the near future;
• firms with modified insolvency preferred resolution strategies, as a transfer strategy may
  still be pursued for these firms where appropriate to advance the special resolution objectives;
• shareholders and holders of regulatory capital instruments (and other non-excluded
  liabilities) which may be subject to losses in the event of a transfer;
• other creditors of such firms and other market participants that may be involved in the
  execution of a transfer; and
• others who would have an interest in resolution actions, such as host authorities of UK
  banking groups subject to a preferred resolution strategy of transfer.
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1.4 In terms of the structure of this document, Part 1 provides an introduction to the transfer
resolution strategy. Part 2 focuses on the Bank’s approach to executing a transfer to a PSP, exploring auctions and bidder selections. Part 3 focuses on the Bank’s approach to executing a transfer to a bridge bank, outlining how operations and governance may be structured. Part 4 summarises the Bank’s recapitalisation payment mechanism following introduction of the Bank Resolution (Recapitalisation) Act 2025 (BRRA 2025) and explores possible uses of the recapitalisation payment mechanism. Selected terms and abbreviations are provided in the Abbreviations and glossary.
1.5 Annex 1 of this document contains two previously used transfer instruments:
Figure 1: Stylised transfer timeline

• Dunfermline Building Society (Dunfermline) Property Transfer Instrument (2009) –
  which transferred all property, rights and liabilities of Dunfermline to Nationwide Building Society (Nationwide), other than excluded property, rights and liabilities.
• Silicon Valley Bank UK (SVBUK) Limited Mandatory Reduction and Share Transfer
  Instrument (2023) – which reduced the value of all capital instruments to zero, cancelled all liabilities owed by SVBUK in respect of the capital instruments (including accrued interest), extinguished all rights of any holder or beneficial owner of capital instruments and cancelled said instruments and transferred all shares in issue to HSBC UK Bank. Opens Opens

1.6 While these instruments provide a useful starting point, any future instruments will be
tailored by the Bank for use in each specific case. As the exact content in any instrument will be determined by the facts and circumstances of the individual case, the Bank reserves the right to depart from the structure and content of the instruments previously used, should it be considered appropriate.
1.7 Annex 2 provides an illustrative contents list for a data room which, if created by a failing
firm, would support the execution of a transfer. Any data room contents would be determined on a case-by-case basis depending on the firm and circumstances in question.
1.8 While the operational guide is intended to be a standalone document, it is not intended to
provide a comprehensive overview of all aspects of a transfer resolution. Where further information is required, users should consult the Bank’s:
1.9 HM Treasury (HMT) has also published a Special Resolution Regime (SRR) Code of
Practice (CoP) which provides guidance as to how, and in what circumstances, the authorities (the Bank, the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and HMT) will use the stabilisation powers and the recapitalisation payment mechanism. As set out in the SRR CoP and crisis management memorandum of understanding , HMT has sole responsibility for authorising the use of any stabilisation power by the Bank which would have implications for public funds.
1.10 This document is intended to increase awareness and understanding of the actions that
may take place in a transfer resolution in the UK. However, resolution is a crisis management tool, and the Bank retains full discretion as to how it responds to the circumstances of any particular case (subject to HMT’s authorisation noted in the paragraph above). As such, any actions taken in a transfer resolution may differ from those set out in this guide.
1.11 If you wish to contact the Bank regarding this publication or any other aspects of
transfer, please email: Enquiries@bankofengland.co.uk.

• Approach to resolution
• Statement of Policy: Approach to setting a minimum requirement for own funds and
  eligible liabilities (MREL) (MREL SoP)
• Statement of Policy: Approach to Assessing Resolvability (RAF SoP)
• Statement of Policy on valuation capabilities to support resolvability (Valuations
  SoP)
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Resolution regime
1.12 The Bank, as the UK’s resolution authority, is responsible for taking action to manage
the failure of certain types of financial institution, including UK-headquartered banking groups, UK-incorporated banks and building societies, and PRA supervised investment firms (together, firms),[1] a process known as ‘resolution’.
1.13 If a firm is failing or likely to fail, and the criteria set out in the Banking Act 2009 (the
Banking Act) are met, then the Bank may use stabilisation powers to advance one or more of the special resolution objectives . More detail on these criteria and the special resolution objectives can be found in the Bank’s approach to resolution. Transfer tools
1.14 Three of the stabilisation tools are types of transfer, namely:
1.15 Transfer to a PSP is a transfer of all or part of a firm’s business, including either the
firm’s shares or its property, rights and liabilities, to a willing and appropriately authorised buyer without the need for the consent of the failed firm, its shareholders, customers or counterparties.
1.16 Transfer to a bridge bank is a transfer of all or part of a firm’s business, including either
the firm’s shares or its property, rights and liabilities, temporarily to a company controlled by and wholly or partially owned by the Bank. This power ensures that the firm’s critical functions are maintained until it is sold (eg through an initial public offering or onward transfer of either
part or all of the business to a PSP). If a sale is not conducted, the firm’s operations will be
wound down at the end of the post-transfer period.
1.17 Transfer to an AMV is a tool which can only be used in conjunction with the transfer tools
described above and/or bail-in tools. This transfer allows a firm’s or bridge bank’s assets, rights and liabilities to be transferred in specific circumstances, with a view to maximising the value of assets through eventual sale(s) or orderly wind down. The vehicle would be wholly or partially owned by the Bank or HMT and controlled by the Bank.

• transfer of a failed firm or all or part of its business to a PSP;
• transfer of a failed firm or all or part of its business to a bridge bank controlled by the
  Bank; and
• transfer of all or part of the business of a failed firm or of a bridge bank to an asset
  management vehicle (AMV) controlled by the Bank. footnote Opens

1.18 Where a transfer is only partial, the remaining parts of the business may be placed into
either a liquidation or administration procedure tailored for the insolvency of deposit-taking firms. If the remaining part of the business provides services that are still required by the acquirer of the transferred business, a bridge bank or an AMV, a bank administration procedure (BAP) may be more appropriate. The required part of the firm can continue to provide the necessary services until permanent arrangements are established. After this, it will be wound up. This was the approach used in the case of the failure of Dunfermline.
1.19 Transfer tools impose losses on shareholders and creditors. Equity of the failed firm
initially absorbs losses, impacting shareholders, before further write-down and/or conversion of regulatory capital instruments (and other non-excluded liabilities) into equity of the failed firm, to effectively recapitalise the institution before the transfer. Losses may also be imposed on creditors by placing any residual claims they have on the failed firm (that are not transferred to an acquirer or bridge bank) into administration.
1.20 The option to use the bail-in stabilisation tool in conjunction with a transfer remains,
provided there is MREL available to recapitalise the firm. Further information on how a bail-in is executed can be found in the Operational guide to bail-in resolution. Opens

Transfer of building societies
Building societies have a different corporate structure to banks. Individuals who have an account or a mortgage with a building society which confers membership are the owners of the society and have certain rights. This includes the right to vote (with some limited exceptions) and to receive information. Each member of a building society has one vote, regardless of how much money they have invested or borrowed,
Figure 2: Illustrative examples of share and property transfers
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or how many accounts they hold. Unlike a company, these rights are not transferable and are extinguished when the member’s business relationship with the building society ends (for example, upon closure of a deposit account). Some building societies issue Core Capital Deferred Shares (CCDS), which are a form of CET1 instrument. Holders of CCDS’ are also members of the society and have one vote each, regardless of the number or value of CCDS they may hold. In resolution, CCDS instruments would absorb losses as CET1 instruments as set out in the Banking Act. If applied to building societies, the transfer may involve demutualisation. Where this is necessary, which includes cases where the acquirer is a bank, the Bank would convert the building society into a company. Membership rights would be cancelled, and prior members would become customers and depositors of the company. This company would be wholly owned by a bridge bank, itself wholly owned by the Bank. The Bank could then subsequently transfer the bridge bank shares to a PSP immediately if a suitable buyer had been identified, or in due course following a sales process out of the bridge bank. These actions will require no member vote and would not follow the process for conversions or transfers of business set out in the Building Societies Act 1986 . It is possible that mutual status of a building society could be preserved if the acquirer were also a building society. In this case, the Bank could transfer all property, rights and liabilities of the building society to the acquiring building society. The Banking Act also allows the Bank to make other provisions in respect of a building society, including conferring rights and imposing liabilities in place of cancelled shares and membership rights. Eligible deposits in the resulting entity would be covered by the Financial Services Compensation Scheme (FSCS), subject to normal limits. Transfer strategy application
1.21 Any of the transfer tools may be considered to execute a resolution for a firm where
transfer is deemed by the Bank to be a credible resolution strategy. These are most likely to be firms with total assets between £25 billion and £40 billion, having considered various factors as outlined in the Bank’s MREL SoP.[2] Where the preferred resolution strategy is transfer, such firms are required to develop capabilities to support a transfer resolution as set out in the Bank’s RAF SoP. Opens footnote Opens

1.22 The RAF SoP applies to firms that have a bail-in and a transfer preferred resolution
strategy and requires them to develop capabilities to prepare for a resolution. For transfer firms, the RAF SoP sets out fewer ex-ante policy requirements than it does for the largest firms with bail-in preferred resolution strategies. In addition, under the MREL SoP, transfer firms are not required to maintain additional loss-absorbing resources in addition to their minimum capital requirements – known as MREL – to support their recapitalisation in resolution, nor are they required to plan for restructuring. Where firms do not have sufficient loss-absorbing capacity to ensure successful execution of a transfer resolution strategy, the new recapitalisation payment mechanism – as introduced by the BRRA 2025 legislation, effective from July 2025 – enables funds sourced from the banking sector (via the FSCS) to be used for this purpose.
1.23 In some cases where a smaller firm fails, the public interest – particularly in respect of
continuity of banking services – may be better served using transfer powers rather than the relevant modified insolvency procedure, even where insolvency is the preferred resolution strategy. Examples of this include where there is disruption arising from services the firm provides stopping or indirectly by negatively affecting confidence in the financial system or similar institutions.
1.24 While some firms will retain a preferred resolution strategy of insolvency, the
recapitalisation payment mechanism provides the Bank with additional flexibility. It broadens the scope of firms that may be considered suitable for transfer at the point of failure and improves the likelihood of identifying a suitable buyer over a resolution weekend for a failing firm with insufficient loss-absorbing capacity.
1.25 The absence of a buyer or of a suitable bid would require the Bank to choose between
placing the firm into insolvency or transferring some or all of the firm’s business to a bridge bank. In considering the use of a bridge bank, the additional execution risk and risk to public funds of managing a bridge bank would inform our assessment on the most appropriate strategy to pursue to advance the special resolution objectives.
1.26 The expected outcomes of using a transfer strategy will be compared to those of putting
the firm into insolvency when assessing whether use of the transfer tools is in the public interest. In making this comparison, and as we seek to advance the special resolution objectives, we would consider the expected costs of all options given implications for use of public funds.
1.27 At the time of publication, the Bank has used the transfer tools twice:

• March 2009 – Dunfermline: core parts were transferred to Nationwide with remaining
  parts transferred to a temporary bridge bank owned and controlled by the Bank. The Opens Opens

1.28 A firm’s preferred and pursued resolution strategy may differ at the point of failure to
address public interest in the advancement of one or more of the special resolution objectives – as was the case with SVBUK. As such, it is important that firms and authorities are agile and adaptable. bridge bank entity was subsequently transferred to Nationwide in June 2009, following a competitive auction process conducted by the Bank. A BAP was used to wind up assets that were not transferred.

• March 2023 – SVBUK: the Bank planned for a variety of resolution strategies
  simultaneously. Although SVBUK’s preferred resolution strategy was a modified insolvency procedure, a transfer was ultimately pursued, with the entire firm eventually sold to HSBC UK Bank. Alongside this, the capital instruments issued by the firm were fully written down to bear losses. Opens

2: Private sector purchaser operational guide
Preparing for a transfer
2.1 A successful transfer requires several steps, many of which authorities will complete
before placing a firm into resolution and transferring it to an appropriate PSP. This process is similar to a normal corporate finance transaction but conducted within a very constrained time frame, under strict confidentiality, and using a statutory mechanism to effect share or property transfer to the purchaser (Figure 3 outlines illustrative steps to execute a transfer). Our preparations for transfer, and the extent to which these steps are followed, depend on the amount of advance notice the Bank has that a firm is in distress and is failing or likely to fail. In a faster-burn situation, we may have to compress our preparations, and the processes outlined throughout this guide may be altered accordingly. Opens

Figure 3: Stylised transfer to a PSP timeline
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2.2 Ahead of any resolution action, the relevant authorities must assess whether the
conditions for a firm to be placed into resolution are met. The four general conditions which must be satisfied are contained in section 7 of the Banking Act.[3]
2.3 The Bank will ensure that the assets and liabilities of the firm are valued for the purpose
of informing the decisions to be taken by the Bank and the PRA, including the assessments as to whether the firm is failing or likely to fail and the level of recapitalisation required.[4] The Bank expects to appoint an independent valuer[5] to carry this out.
2.4 In parallel with appointing an independent valuer, the Bank begins preparing for the sale
process by engaging corporate finance advisers. The Bank has access to advisers through the Resolution Procurement Framework.[6] These advisers draw on their existing market knowledge to help the Bank run a competitive, targeted and efficient sales process.
2.5 At this initial stage of planning, advisers in close consultation with the Bank would be
expected to develop the marketing process in accordance with the requirements set out in
section 11A of the Banking Act. Under these requirements, the Bank must ensure the
marketing approach is as transparent as possible, having regard to the circumstances and the need to maintain financial stability; ensures no conflict of interest; takes account of the need to act quickly to address the situation where a bank is failing or likely to fail; and aims to maximise, as far as possible, the sale price for the securities or property, rights or liabilities involved. The marketing arrangements must not favour or discriminate between potential purchasers or grant an unfair advantage to a potential purchaser. The Bank is not required to meet these marketing requirements where the Bank considers that it would undermine advancement of one or more of the special resolution objectives.
2.6 Identifying suitable bidders forms the essential first step in the marketing process. It is
important to identify potential acquirers that have the operational capability, strategic alignment, and financial resources to complete a transaction within the required timeframe. When engaging with prospective bidders, the Bank and its advisers will consider a range of relevant factors in determining which bidder might best advance the special resolution objectives, including:

• appropriateness of regulatory permissions and group/entity structures;
• transparency of ownership and accountability structures;
• adequacy and availability of financial resources;
• business model compatibility and strategic alignment;
• governance and senior management capability;
• ability to complete a transaction in the required timeframe; and
• possible effects on public confidence.
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2.7 In contrast to standard merger and acquisition (M&A) transactions, the Bank faces distinct
challenges when looking to transfer a failing firm. As any resolution-related transfer will likely occur under distressed conditions, it is important to maintain strict confidentiality throughout the marketing process to ensure that no premature disclosure or actions undertaken by the Bank destabilise the firm or undermine the integrity of the sale. At the same time, this confidentiality must be carefully balanced against the need to provide sufficient transparency to prospective bidders to preserve a fair, competitive and credible auction.
2.8 Section 11A of the Banking Act notes that public disclosure of the marketing of any
securities issued by or any property, rights or liabilities of the failing firm may be delayed where certain conditions are met. The firm is solely responsible for making any decision to delay disclosure of inside information. Under Article 17(4) of Regulation (EU) No 596/2014 (as assimilated into UK law), a firm is permitted to delay disclosure of inside information if immediate disclosure is likely to prejudice the legitimate interests of the firm, delay would not be likely to mislead the public, and the firm is able to ensure the confidentiality of the information. If a firm has delayed the disclosure of inside information under Article 17(4), it must notify the FCA that disclosure of the information was delayed immediately after the information is disclosed to the public. Upon request of the FCA, the firm must provide a written explanation of how the applicable conditions were met. Under Article 17(5), to preserve the stability of the financial system, a firm may on its own responsibility delay the public disclosure of inside information where the following conditions are met:
2.9 The Bank and the FCA would liaise closely in circumstances where a request has been
made by a firm to the FCA to delay disclosure of inside information.[7] Auction process
2.10 After identifying suitable bidders and completing initial engagement, the Bank will
commence the auction process. The timing, sequencing and structure of this process will depend heavily on the specifics of the case, including the speed and nature of the firm’s failure. It may be the case that a firm has already begun a going concern sale process as part of its suite of recovery actions. The Bank will need to carefully manage the transition from any

• the disclosure of the inside information entails a risk of undermining the financial stability of
  the issuer and of the financial system;
• it is in the public interest to delay the disclosure;
• the confidentiality of that information can be ensured; and
• the FCA has consented to the delay on the basis that the conditions in (1) to (3) are met.
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firm-led sale process already underway into a Bank-led transfer process. Where appropriate, the Bank will leverage any work already undertaken by the firm to ensure that its own processes are as efficient as possible.
2.11 While the overall sequencing of the auction will broadly follow the structure outlined
below, the precise timing and order of events will vary by case and may not align with the illustrative timeline. For example, timeframes will likely differ in cases where the bridge bank tool has already been used (Part 3 has more information on the bridge bank tool), where the Bank will seek to ensure there is appropriate competitive tension in any auction process to support advancement of the special resolution objectives.
2.12 The Bank anticipates that an auction will generally follow one of two approaches:

• Counterparties are invited to participate in the bidding process and sign a non-disclosure
  agreement (NDA).
• Participating bidders are granted access to the data room to conduct preliminary due
  diligence and assess the feasibility and commercial viability of submitting an offer within the required timeframe.
• Bidders submit initial non-binding offers (NBOs) based on the information available in the
  data room, setting out pricing, transaction structure and any material conditions or dependencies.
• The Bank will evaluate the NBOs against the special resolution objectives. Selected
  bidders will be invited to participate in a second round.
• Shortlisted bidders will be requested to submit an updated binding offer.
• The Bank selects the preferred bid.
• The resolution instrument is published and transfer is executed.
• A longer auction with two bidding rounds in which bidders first submit NBOs that can be
  negotiated and refined. Following this, a shortlist of acceptable bidders is then invited to submit final binding bids.
• A shorter auction with a single bidding round in which all bids are submitted by a fixed
  deadline and evaluated simultaneously. This enables the Bank to identify a preferred bidder swiftly while maintaining competitive tension within the shortened timeframe. Opens

2.13 Establishing a well‑structured and comprehensive data room plays a critical role in
ensuring an effective auction process and, ultimately, a successful transfer. It provides both the Bank and potential acquirers with the information they need to make timely, informed decisions. The breadth and quality of the data made available and, importantly, the firm’s ability to produce it quickly and accurately under pressure directly influence the success of any pursued transfer strategy at the point of failure.
2.14 For bidders, the data room should support their ability to conduct due diligence by
supplying the information they need to assess the failing firm’s financial position, asset quality and organisational profile. However, the nature of a resolution means there will likely be significantly less time to scrutinise this during due diligence versus the usual timeframes anticipated in standard M&A transactions. This can impact bidders’ ability to evaluate risks,
Figure 4: Sequencing of the two auction approaches
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form a credible valuation or assess whether they can safely onboard the transferred business. Any constraints may reduce participation and undermine the effectiveness of the marketing process.
2.15 For the Bank, the data room offers insights into both the failing firm’s condition and each
bidder’s capabilities. The information provided allows for an up-to-date valuation to be conducted, which informs the Bank’s view of what a reasonable bid may be. In addition, bidders’ interpretations of and requests for information can indicate their operational readiness, risk management capabilities and overall suitability to acquire the business. All of this information may inform the Bank’s subsequent assessment of any proposals.
2.16 The data room will typically contain a broad set of materials but its specific contents will
vary according to the circumstances of the firm’s failure. The list below is intended to provide an illustrative example of what information may be requested. Illustrative data room contents The data room may contain the following:

• Asset portfolio information, including loans, treasuries, derivatives, debt securities
  and other material asset data
• Deposit information, including data on eligible and ineligible deposits and the use of
  third parties such as deposit aggregators
• Historical financial data, including relevant historical portfolio and balance sheet
  information and reconciliations of these data to data tape and portfolio information provided elsewhere
• Real estate and property information, including branch and premises details where
  relevant
• Material contractual arrangements, including key commercial and operational
  contracts
• Employee and workforce information, including standard employment terms,
  management contracts, remuneration information and staff policies
• Transfer of Undertakings (Protection of Employment) regulations (TUPE) and
  employee transfer analysis, where applicable
• Corporate structure and governance information, including group structure and
  organisational arrangements
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A more comprehensive indicative list can be found in Annex 2.
Evaluating the bids
2.17 Following the conclusion of the auction process, the Bank will evaluate the binding offers
received. This assessment will focus on the extent to which the bidder and their bid advance one or more of the special resolution objectives (of which there is no order of preference). Some of the considerations of how bids may further each special resolution objective are provided on an illustrative, non-exhaustive basis as follows:

• Shareholding and equity information, including ownership and control details for
  in‑scope entities
• Pension arrangements, including key asset and liability information
• Operational support and vendor information, including materials relevant to
  business continuity
• IT systems and infrastructure overview
• Risk management information, including key frameworks, policies and internal
  reports
  To ensure the continuity of banking services and critical functions in the UK:
• Generally speaking, we are likely to prefer broader bids for a firm’s business over narrow
  bids, especially where a narrow bid does not include all of the banking services or functions that we want to continue. If the Bank uses the transfer strategy, the Bank’s preference is to facilitate a whole firm sale to a PSP. A complete transfer perimeter through share transfer could minimise operational execution risks associated with the sale, which may be increased in cases where bidders’ proposed transaction perimeters increase complexity regarding separability.
• Bids should demonstrate that a bidder can maintain operational continuity and support the
  failing firm’s critical functions and business lines immediately following the transfer.
• Bidders’ business models should be a compatible, strategic fit with the failing firm.
  To protect and enhance the stability of the UK financial system:
• The bidder should be able to execute the transfer effectively and complete the transaction
  within the required timeframe, having regard to the capability of its board and senior management, its track record in executing M&A and business model compatibility. Bidders with strong financial resources and reputation are more likely to maintain both customer Opens

2.18 The Bank will also consider a range of additional factors, which may impact the special
resolution objectives. These include, but are not limited to, the level of cash consideration offered (and the associated economic outcome for public funds, the UK financial system and the Bank), the absence of conditionality attached to the transaction, the likelihood of fulfilling any such conditions, and the bidder’s capacity to honour its offer and complete the confidence in the transfer and broader trust in the financial system, thus minimising the risk of contagion. To protect and enhance public confidence in the UK financial system’s stability:

• The extent to which a bidder holds, or can obtain, the necessary regulatory permissions for
  a timely transfer will impact ability to minimise depositor and creditor uncertainty, and any adverse perception of the transfer or resolution process.
• The bidder should demonstrate understanding of, and familiarity with, relevant UK
  regulatory requirements.
  To protect public funds, including by minimising reliance on extraordinary public financial support:
• A bidder should have available financial resources and funding capabilities to meet
  existing funding gaps and any anticipated outflows.
• The Bank will have regard to the desirability for the purchaser to make appropriate
  contributions to the recapitalisation.
  To protect depositors and investors to the extent that they have investments or deposits covered by the FSCS:
• The acquirer should have appropriate authorisations in place.
  To protect, where relevant, client assets:
• The bidder’s proposed transaction perimeter should facilitate this, and the acquirer should
  have appropriate risk management practices and authorisations in place.
  To avoid interfering with property rights, in contravention of the European Convention on Human Rights:
• The transfer should be executed in a lawful, proportionate and fair manner that pursues
  the best outcomes for existing shareholders and holders of regulatory capital instruments (and other non-excluded liabilities), while having regard to the special resolution objectives. Opens

transaction within the required timeframe. As part of the transfer, any competition, and any wider implications, of the bid, such as resilience and security implications, will be considered by the relevant authorities.
2.19 The Bank is open to bids from a range of credible parties and recognises that no single
bidder is likely to be able to fully achieve all special resolution objectives. Instead, the focus is on identifying the option that best advances the special resolution objectives considering the circumstances, balancing factors such as greater deal certainty with more favourable economic outcomes. However, the Bank may, where reasonable, choose not to accept, review or consider any proposal or offer submitted and retains discretion over its final decision, subject to having regard to the special resolution objectives. The absence of a suitable bid would require the Bank to choose between placing the firm into insolvency or transferring some or all of the firm’s business to a bridge bank.
2.20 In considering the use of a bridge bank, the additional execution risk and risk to public
funds of managing a bridge bank would inform our assessment on the most appropriate strategy to pursue to advance the special resolution objectives. The Bank will need to carefully consider the balance between the likelihood of more appropriate bids (for example, of higher cash consideration) being forthcoming where there is more time available for due diligence (if the Bank used the bridge bank tool), versus the possibility for increased risk to public funds that this alternative strategy may introduce. Execution risks in a transfer to a PSP
2.21 A range of factors may impede the successful execution of a transfer. These challenges
may stem from firm-specific obstacles, limitations faced by potential bidders or prevailing market conditions.
2.22 Incomplete information and difficulty in verifying data and answering bidders’ questions
in the short period of time available to conduct due diligence may make it challenging to form an accurate assessment of risks. This can discourage bidders and reduce participation in the auction or lead to more conservative or conditional offers to reflect potential downside risk.
2.23 The bidder may also face operational challenges in executing the transfer. For example,
continuity risks may arise where there is a mismatch between the bidder’s operating model and that of the failing firm. Where failing firms have developed continuity-related capabilities as set out in the RAF SoP, these may help to mitigate these risks. However, this cannot be relied upon for all firms where a transfer resolution strategy may be pursued at the point of failure. Opens

2.24 Some of these challenges can be mitigated by the selection of an appropriate bidder
with the right capabilities. For example, funding-related risks may be reduced by prioritising bidders with strong liquidity positions and diversified funding sources, while operational continuity risks can be mitigated by selecting an acquirer with the operational capability and experience to integrate the firm effectively.
2.25 It is hoped that the further transparency provided in this operational guide on how a
transfer is executed, and the challenges that may be faced in doing so, will help to increase understanding of what bidders need to take into consideration during any bidding process.
2.26 Since the introduction of the recapitalisation payment mechanism, there is also the
potential for the provision of funds if it is necessary to recapitalise the firm to achieve a transfer in pursuit of the special resolution objectives. For example, in a fast failure circumstance where there is very limited time for due diligence, it may be the case that a suitable acquirer can only be found if the recapitalisation payment mechanism is used (possibly in a contingent or deferred form), without which the Bank’s advancement of the special resolution objectives would be undermined. Further information on potential use of the recapitalisation payment mechanism is provided in Part 4. 3: Bridge bank operational guide The use of the bridge bank tool
3.1 Where it has not proved possible to select a bidder or execute a transfer to an appropriate
PSP, and it is deemed there is no alternative course of action that could be taken that would better advance one or more of the special resolution objectives at that point, the Bank may take temporary control of the failed firm or parts of it by transferring it to a bridge bank, with a view to a further transfer of the firm or its parts (Figure 5 outlines illustrative steps to execute a transfer). Opens

3.2 As set out in the SRR CoP, the primary objective of a bridge bank is to maintain access to
critical functions and facilitate the sale or transfer of the failing firm. A bridge bank is intended to be a short-term option, although the Bank may operate the bridge bank for up to two years, unless the Bank decides to extend (or further extend) it. The Bank can extend the period if it is satisfied that the extension meets one of the conditions in section 12(3D) of the Banking Act. Reasons for an extension under section 12(3D) may include that it would provide more time to execute an orderly transaction of a substantial part of the firm to a PSP, which may be driven by the need for regulatory approvals and due diligence to take place, or that the extension is necessary to ensure the continuity of essential banking or financial services.
Figure 5: Stylised transfer to a bridge bank timeline
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3.3 The bridge bank can be sold in its entirety, or parts of the business can be sold to one or
more PSPs. As noted in Part 1, if the sale is not conducted within this period, and the Bank does not extend its duration, the business would be wound down.
3.4 Where a transfer to a PSP is considered, preparations for a bridge bank will need to be
sufficiently advanced during the contingency planning period.
3.5 Key actions must be carried out to ensure the bridge bank’s viability, including preparing
to use the recapitalisation payment mechanism, preparing access to liquidity through the Resolution Liquidity Framework (RLF) and putting appropriate governance arrangements in place.
3.6 In line with the SRR CoP, the Bank would maintain oversight of the bridge bank,
managing its relationship at arm’s length, but only insofar as the pursuance of bridge bank objectives is not compromised. Management at arm’s length may not be appropriate if the bridge entity is only operated for a short period of time, as intended and envisaged. The Bank may be more involved, where necessary, to advance the special resolution objectives and as supplemented by the bridge bank objectives. Establishment of the bridge bank
3.7 Use of the bridge bank tool involves the transfer of shares or property, rights and liabilities
to a subsidiary wholly or partially owned by the Bank (the Bridge Bank Holding Company (HoldCo)). Where the Bank uses share transfer powers, the HoldCo becomes the owner of the failed firm (the Bridge Bank Operating Company (OpCo)). Where the Bank uses property transfer powers, the Bank may consider establishing both a HoldCo and an operating company owned by the HoldCo, or transfer property directly to the HoldCo.[8]
3.8 There are many steps involved in establishing the bridge bank, including producing a set
of key documents to formalise this arrangement such as the transfer instrument, framework document, articles of association and legal directions.
3.9 The transfer instrument will be made by the Bank (as resolution authority) using its
statutory powers under the Banking Act. The Bank will determine the appropriate contents of the instrument, which will include the transaction perimeter and elements relating to whether the transfer involves shares or property. The instrument will also carry out the mandatory reduction, or bail-in, of some or all of the failed firm’s existing capital instruments to the extent required to advance one or more of the special resolution objectives.
3.10 To complement the transfer instrument, the Bank will establish arrangements in relation
to the operation of the bridge bank. These include:
footnote
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Governance arrangements
3.11 Certain of the Bank’s wider responsibilities beyond resolution intersect through its
various roles when the bridge bank tool is used. As a result, the Bank needs to put in place arrangements to ensure that the bridge bank is appropriately managed and governed and to allow the Bank to effectively manage its involvement, given its capacity as central bank, resolution authority, lender of last resort and shareholder. These arrangements are also important to ensure the PRA’s ability to act as prudential regulator.
3.12 The governance arrangements are designed to ensure that the Bank manages its
relationship with the bridge bank on an arm’s length basis, particularly in respect of day-to￾day operations, with involvement focused at a strategic level. However, there are periods

• Articles of Association: The Bank will produce legally binding articles of association of
  the HoldCo. These provide company regulations governing the relationship between the Bank (in its capacity as shareholder) and the directors of the company. These articles will be based on the model articles prescribed by the Secretary of State for a limited liability company, with modifications determined by the Bank as necessary or appropriate.
• Framework Document: A framework document is a non-legally binding acknowledgment
  by the Bank (in its capacity as shareholder), the HoldCo and the OpCo, or representatives of the parts of the firm that have been transferred to the HoldCo, which sets out the day-to￾day relationship between the bridge bank parties, in practice. It is a formal expression of mutual understanding and intent, operating in light of the special resolution objectives and supplemented by the bridge bank objectives. It also provides a structured approach to the governance arrangements among the bridge bank parties.
• Operating strategy: The Bank must decide the operating strategy of the bridge bank,
  which will be case-specific and based on meeting the bridge bank objectives. The HoldCo’s business plan, which may be required for authorisation purposes, will focus on ensuring that the bridge bank achieves the bridge bank and special resolution objectives, in particular through operating on a conservative basis, preserving the franchise value of the business and providing continuity of critical services, as well as protecting public funds.
• Legal direction: The Bank can give formal legal directions to the OpCo’s executives and
  directors at the point of resolution. This could, for example, set out information demands from the Bank to the OpCo board and place other obligations on directors, and includes the power to remove members of management. The Bank has broad powers to direct management in resolution; sanctions can be imposed should such directions not be followed. Opens

where the Bank’s role would be more active (for example, to ensure stabilisation and to execute a transfer to a PSP). The Bank will adapt the governance arrangements for the specific case, and these may evolve while a bridge bank is operated.
3.13 In addition to the Bank’s usual governance arrangements, there will be a number of
bodies tasked with more direct involvement, while balancing continued operation on an arm’s length basis. HoldCo board
3.14 The Bank will establish a board of directors for the HoldCo. The HoldCo board is
expected to act in the interests of the Bank as the sole shareholder of the HoldCo, ensuring the special resolution objectives and bridge bank objectives are pursued as set out in the business plan. The expectation is that the HoldCo directors would act as investment managers with regard to the Bank’s ownership of the OpCo, with limited oversight of and involvement in the day-to-day operations of the firm. Directors of the HoldCo are likely to consist of senior employees of the Bank. OpCo board (or management team)
3.15 The Bank will consider the composition of the OpCo board at all times, ensuring it
remains appropriate. This will be considered and decided by the Bank on a case-by-case basis. The Bank will ensure it has the power to appoint additional directors and remove existing directors using the legal direction described above.
3.16 The Bank’s preference, where appropriate, would be to retain some of the previous
management team of the failed firm or parts of it that have been transferred to the bridge bank. This management team will be required to support the Bank’s management of its relationship with the bridge bank on an arm’s length basis. Any arrangements in relation to the management of the transferred shares or property, rights and liabilities will depend on the specifics of the case.
3.17 Typically, an OpCo board will remain responsible for management of the OpCo’s day-to￾day business activities. The OpCo board will retain their responsibilities in a bridge bank,
overseeing the everyday running, viability and regulatory compliance of the firm.
3.18 The OpCo board will be expected to report to the HoldCo board and to share information
with the HoldCo directors and the Bank to support oversight and decision-making. They are also expected to take actions in support of the special resolution and bridge bank objectives in accordance with the framework document. Opens

3.19 The OpCo’s board members and senior managers performing Senior Management
Functions under the Senior Managers Regime will continue to need to be approved persons. The OpCo board will be expected to develop remuneration packages for the OpCo directors and senior management, including appropriate annual targets and in light of annual budgets, and succession plans. However, the Bank will expect the OpCo board to involve the Bank in these decisions. Bank representative
3.20 The Bank expects to appoint a ‘Bank representative’, who will play a central role in the
management and operation of the bridge bank, and will likely be an employee of the Bank. This individual will lead the Bank’s oversight of the delivery of the special resolution and bridge bank objectives and manage the relationships between bridge bank parties. Advisers
3.21 The Bank has considerable flexibility when determining whether to appoint external
advisers and, if so, what they should be responsible for. This may include a statutory appointment of a resolution administrator. This allows the Bank to determine the most appropriate scope of the advisers’ objectives according to the specific circumstances and needs of the case. The Bank may appoint more than one adviser to perform various functions in respect of the bridge bank, and the advisers may be individuals or body corporates.
3.22 The advisers may be appointed to perform some or all of the following duties:
3.23 The advisers are accountable to the Bank and will report to the Bank representative on
day-to-day matters.

• advise the Bank on a range of matters relating to the bridge bank transfer transaction;
• work with the Bank and the OpCo to develop plans to stabilise the firm and maintain key
  operations;
• work with the OpCo on communications, continuity planning, crisis management, risk
  management, loss minimisation plans, service continuity, supplier contracts and staff retention;
• work on any restructuring required to meet the Bank’s objectives to return the OpCo to
  viability and private control; and
• support work to prepare for and execute an eventual sale (in the case of a transfer to a
  PSP).
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Authorisation
3.24 The Bank will work with the PRA and the FCA to ensure that there are appropriate
authorisations in place, where necessary, to enable the bridge bank to continue to carry out the relevant regulated activities.
3.25 Where a share transfer takes place, there is a requirement under Part XII of the
Financial Services and Markets Act 2000 (FSMA 2000) for a person to obtain approval from the relevant supervisory authority (the PRA or the FCA) prior to obtaining or increasing control in an entity, known as a change in control.[9]
3.26 The statutory procedure for obtaining an approval for a change in control includes a
requirement for the person to submit a section 178 notice to the relevant supervisory authority.[10]
Figure 6: High-level bridge bank organisational structure
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3.27 In conjunction with HMT, the Bank has considered the feasibility of undertaking a
change in control notification and approval process where a bridge bank is used and timeframes are extremely compressed. It is possible for HMT to use their powers as set out in
section 192 of FSMA 2000 and/or section 75 of the Banking Act to disapply the
requirement for pre-notification of the PRA, generally in specified cases of acquisition of control. This would make provision in advance of firms failing that would only apply when the Bank is exercising the stabilisation power to establish a bridge bank. Accounting treatment
3.28 The Bridge Bank HoldCo (and its subsidiaries) would not need to be consolidated into
the Bank’s accounts.
4: Bank Resolution (Recapitalisation) Act 2025 – recapitalisation payment mechanism use cases
4.1 The BRRA 2025 provides enhancements to the existing resolution regime by introducing
a new recapitalisation payment mechanism to allow the Bank to use funds from the banking sector, levied by the FSCS as the Deposit Guarantee Scheme (DGS) manager,[11] to cover certain costs associated with transferring a failing firm. This mechanism is comparable to DGS funded mechanisms used by some other resolution authorities. Key features of the recapitalisation payment mechanism
4.2 The recapitalisation payment mechanism introduced by the BRRA 2025 amends the
Banking Act and FSMA 2000 to:

• allow the Bank to require the FSCS to provide funds to recapitalise a failing firm;
• allow the FSCS to levy to recover these funds;
• allow the Bank to require the firm in resolution to issue new shares to facilitate the use of
  funds to meet the failing institution’s recapitalisation costs; and
• require the Bank to report to HMT and Parliament on the use of the recapitalisation
  payment mechanism.
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4.3 The recapitalisation payment mechanism can only be deployed in connection with the
exercise of a stabilisation power to achieve a transfer of all or part of the failing firm to a PSP or a bridge bank. The features of the recapitalisation payment mechanism broaden the scope of firms for which the Bank may consider pursuing a transfer strategy at the point of failure. Recapitalisation payments
4.4 Prior to exercising its resolution powers, the Bank will need to assess whether one or
more of the special resolution objectives would not be met to the same extent by the winding up of the firm. In circumstances where it is in the public interest, and a transfer further advances the special resolution outcomes versus an insolvency, the Bank may assess whether a recapitalisation payment is necessary. This will be informed by the required resolution valuation and an assessment of any shortfall amount. The Bank would first write down regulatory capital, and intend to write down, or otherwise expose, all other readily available MREL resources, if any, to loss before obtaining a recapitalisation payment from the FSCS. In certain circumstances, having regard to the special resolution objectives, it may be possible that other non-MREL liabilities that are eligible for bail-in could also be written down or converted to equity, as a precursor to a transfer.
4.5 This payment is based on the Bank’s calculation of the amount likely needed to
recapitalise the firm (to balance its assets with its liabilities and restore capital adequacy) and cover any other resolution related expenses that the Bank or other relevant person (such as HMT, a bridge bank or an AMV) has or might incur in connection with the recapitalisation or use of the transfer tool.[12] Among other recapitalisation costs, these funds could be used for upfront capital injections or to cover contingent or deferred recapitalisation payments to help achieve a transfer of all or part of the firm to a PSP or a bridge bank to advance the special resolution objectives. The amendments to FSMA 2000 outlined in the BRRA 2025 provide powers for the Bank to require the failing firm to issue new shares to facilitate the recapitalisation. Further detail of assessment of auction bids against the special resolution objectives can be found in Part 2: Evaluating the bids.
4.6 The operational underpinnings that facilitate the provision of funds via the recapitalisation
payment mechanism mirror the FSCS’ arrangements for a covered depositor payout in a modified insolvency. The FSCS will likely source the initial payment from its commercial borrowing facilities and then recover the funds by levying ex-post. If the amount required is higher than the limit on the commercial borrowing facility that the FSCS (as DGS scheme manager) has access to, and/or exceeds the amount that can be levied for, the FSCS would be able to request financial assistance from HMT, including potentially requesting to borrow from the National Loans Funds (which would be repaid using levies over time). Any financial assistance would be provided at HMT’s sole discretion. However, the design of the footnote Opens

recapitalisation payment mechanism ensures that public funds remain protected as far as possible, while maintaining continuity of access to deposits for customers and preserving financial stability.
4.7 The amendments to FSMA 2000, as set out in the BRRA 2025, require the Bank to
reimburse the FSCS for any funds provided to use the recapitalisation payment mechanism relating to a firm, which are not needed to cover the costs and expenses because:
Illustrative use cases
4.8 As noted in Part 2: Execution risks in a transfer to a PSP, there are a range of factors that
may impede the successful execution of a transfer to a PSP, such as incomplete information in the data room, uncertain liabilities, issues with the acquirer’s financing and/or capabilities and adverse market conditions. The recapitalisation payment mechanism provides the Bank with additional flexibility which can help to address certain challenges, broadening the range of pursued resolution strategies available for smaller institutions and increasing the likelihood of achieving an orderly transfer without a reliance on public funds, therefore resulting in better advancement of the special resolution objectives.
4.9 If the Bank uses the transfer strategy, the Bank’s preference is to facilitate a whole firm
sale to a PSP. This is based on the assumption that a whole firm sale is most likely to provide protection to public funds, while maintaining continuity of access to deposits and banking services for customers and preserving financial stability. However, the Bank recognises that this may not always be the case and it may not always be possible without further intervention. For example, if there is insufficient confidence that the failing firm is viable due to a capital shortfall, or if there are potential downside risks which cannot be adequately sized due to the potential acquirers having limited time to conduct full due diligence.
4.10 Use of the recapitalisation mechanism may help to mitigate some of these barriers. For
example, an upfront capital injection could be used to strengthen a failing firm’s balance sheet and ensure that the firm is solvent and adequately capitalised, which may make it more likely to be attractive to a PSP. In this case, the capital could support stabilisation of the firm and provide the purchaser with confidence that the business is viable.
4.11 Alternatively, where there are significant barriers caused by the short timeframes within
which due diligence around the acquisition must be conducted, a recapitalisation payment could be used to remove or reduce the possible risks to the acquirer which may be present. This could help to reduce uncertainty, increasing the likelihood that a whole firm transfer

• those costs and expenses were lower than the Bank expected; or
• there are recoveries from the sale or winding up of part or all of the failed firm.
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could be executed in short timeframes. Using the recapitalisation payment mechanism, the Bank has flexibility, if required, to provide deferred recapitalisation payments, possibly in the form of guarantees, to cover specific losses if certain pre-agreed conditions are met after the transfer has taken place. Any guarantee would be limited up to a pre-agreed amount.
4.12 Both of these use cases of the recapitalisation payment mechanism could broaden the
pool of potential acquirers and increase the likelihood of a whole firm sale. An increased bidder pool size can also create competitive tension in the auction process and potentially improve the sale price, which in return could reduce the net cost to the FSCS and the funds required from the banking sector. Guarantees may further reduce the size of funds ultimately required, compared with an upfront capital injection, given the contingent nature of the payout. Use of the recapitalisation payment mechanism in these ways would likely increase complexity. Where acquirers seek arrangements such as these in their bids, any risks associated with these more complex arrangements would be considered when selecting the bid that best advances the special resolution objectives.
4.13 While there are benefits to the use of recapitalisation payments in certain circumstances,
the Bank recognises that any actions taken must balance both the needs of the failing firm with those of the wider financial system. The Bank is mindful that funds made available through the new mechanism are drawn down from the wider industry and it is important for the Bank to be satisfied that any use of them is necessary in the public interest. In line with established safeguards, including those set out in the SRR CoP, the Bank will not utilise the new mechanism inappropriately to protect creditors from losses.
4.14 Irrespective of the idiosyncrasies of each case, the Bank will always endeavour to use
funds in the most efficient and effective way possible. The decision to require a recapitalisation payment from the FSCS would be taken by the Bank, in consultation with the relevant authorities. The Bank would consider the relative costs of different options using a pre-resolution valuation and compare the likely outcomes of insolvency with transfer. Use of the recapitalisation payment mechanism will always be situation specific, and the Bank will work with advisers to assess bids and consider the most appropriate structure and use of funds to facilitate each transaction to best advance the special resolution objectives. Abbreviations and glossary Asset management vehicle (AMV) – A resolution tool that allows property, rights and liabilities of a failing firm to be transferred to a separate entity controlled by the Bank with the objective of maximising their value through sale or orderly wind down. Opens

Bail-in – A resolution tool that enables shares, debt and other liabilities of a firm to be written down or converted to absorb losses and recapitalise the firm. Bank administration procedure (BAP) – A modified insolvency procedure for the part of a failed firm not transferred in resolution. It prioritises maintaining a failed firm’s services to support the transferred business. Banking Act 2009 (the Banking Act) – Domestic legislation that established the UK’s resolution regime and sets out the responsibilities and powers of the Bank as UK resolution authority. Bank Resolution (Recapitalisation) Act 2025 (BRRA 2025) – An Act that amends existing domestic legislation to establish the Bank’s ability to require the Financial Services Compensation Scheme to provide funds to make recapitalisation payments in respect of certain costs associated with actions taken in resolving failing firms. Bridge bank – An entity set up and controlled by the Bank. It acquires a failed firm’s critical functions temporarily, until an onward sale can be completed or, if that is not possible, its assets wound down and liabilities discharged. Critical functions – Activities (such as deposit-taking and lending) that some firms provide, which would lead to an impact on the real economy if they immediately stopped. Financial Conduct Authority (FCA) – The UK’s financial services conduct regulator. Financial Services Compensation Scheme (FSCS) – The UK’s Deposit Guarantee Scheme. Guarantee – A type of contingent recapitalisation payment that could be used by the Bank in the transfer of a firm to a private sector purchaser. His Majesty’s Treasury (HMT) – The UK government’s economic and finance ministry. Host authority – A resolution authority in a jurisdiction in which the firm provides services through one or more subsidiaries or branches. Minimum requirement for own funds and eligible liabilities (MREL) – A requirement for a firm to maintain a minimum amount of equity and liabilities which meet certain criteria so that, if a firm fails, losses can be absorbed and the resolution authority can implement the resolution strategy. Modified insolvency procedure – A procedure for banks or building societies that prioritises the rapid payout or transfer of insured deposits. Opens

National Loans Fund – The central government’s main borrowing and lending account, administered by HMT with bank accounts maintained at the Bank. Property transfer – A transfer resolution strategy which involves transferring property, rights or liabilities of a specified firm. Prudential Regulation Authority (PRA) – The UK’s financial services prudential regulator. Public interest test – An assessment made by the Bank, in consultation with HMT and a failing firm’s supervisors, to determine whether it is necessary for the Bank to use resolution powers to advance one or more of the special resolution objectives. Resolution Liquidity Framework (RLF) – A flexible framework to lend to firms where the entity is in a Bank-led resolution. Resolution powers/tools – The Banking Act gives the Bank a number of statutory powers to resolve a firm. These include the bail-in and transfer tools. Resolution Procurement Framework – The Bank’s framework to appoint advisers to support work on resolution planning in business as usual and where a regulated entity is under stress. The Bank may seek advisory support to deliver a resolution (eg resolution valuations or insolvency practitioner support). Resolution strategy – The Bank identifies firm-specific preferred resolution strategies, which indicate the Bank’s intended approach to resolution (ie bail-in, transfer, modified insolvency). Resolvability Assessment Framework (RAF) – The Bank’s and PRA’s approach to assessing whether firms operating in the UK with bail-in or transfer as their preferred resolution strategy are prepared for resolution. Share transfer – A transfer resolution strategy which involves transferring securities issued by the specified firm. Special resolution objectives – Seven objectives set out in the Banking Act which the relevant authorities, including the Bank, must have regard to in using, or considering the use of: stabilisation powers; the bank insolvency procedure; or the bank administration procedure. The objectives are to be balanced as appropriate in each case. Special Resolution Regime (SRR) – A regime which seeks to address the situation where all or part of the business of a firm has encountered, or is likely to encounter, financial difficulties. Opens Opens

Statement of Policy (SoP) – A formal document in which the Bank details its policy on a particular matter. Statements of Policy usually set out the Bank’s approach to exercising powers conferred by FSMA 2000 and/or the Banking Act. They do not contain the PRA’s expectations for how a firm should act, which are set out in supervisory statements. Transfer – A resolution power that transfers part or all of a failing firm to a purchaser or, temporarily, to a bridge bank. Annexes These resolution instruments have been included to provide an indication of how a transfer may be operationalised in terms of the actions that the Bank may take, and how, in a resolution. A transfer resolution remains a crisis management tool and, as such, the Bank must retain the full discretion accorded to it under the Banking Act as to how it responds to the circumstances of a particular case. Any use of the transfer tool will depend on the facts and circumstances of a particular case and may be different from the actions and approach set out in the resolution instruments used in previous examples. Accordingly, these resolution instruments are not, and should not be regarded as, indicative of the Bank’s settled view in relation to any aspect of transfer or resolution generally, or as indicative that any actual transfer resolution instrument which may be required in connection with the resolution of a particular firm in the future would be in this form or would contain provisions the same as or similar to any of the provisions therein. Silicon Valley Bank UK Limited Mandatory Reduction and Share Transfer Instrument 2023 Dunfermline Building Society Property Transfer Instrument 2009
Annex 1: Transfer instruments
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Building on Part 2, the illustrative data room contents have been included to provide an indication of the information that may be requested from a failing firm in the eventuality that the Bank is considering a transfer resolution strategy. The Bank retains full discretion as to what information it requests, which will depend on the facts and circumstances of a particular case.
Annex 2: Data room – illustrative contents list
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Table 1: Illustrative data room contents
Number Document Priority
01 [Project Name]
01.01 Project Name – process letter High
01.02 Project Name – information memorandum Low
02 Data tapes
02.01 Loan tapes
02.01.01 Asset/portfolio type 1 static tape High
02.01.02 Asset/portfolio type 2 static tape etc High
02.01.03 Historical data tape Medium
02.02 Deposit tapes
02.02.01 Eligible deposit tapes High
02.02.02 Ineligible deposit tapes High
02.03 Treasury asset tapes Medium
02.04 Derivative tapes Medium, if applicable
02.05 Debt securities in issue tapes Medium, if applicable
02.06 Other assets Medium
02.07 Interbank lending High, if applicable
02.08 Reconciliation with balance sheet Medium
03 Real estate
03.01 Real estate schedules (including all branches if relevant) Medium
03.02 Contracts Medium
04 Human resources
04.01 Standard employee contracts
04.01.01 Anonymous standard contract Medium
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Number Document Priority
04.02 Management team employment contracts
04.02.01 Anonymous management contract Medium
04.02.02 Remuneration documents Medium
04.03 Staff handbook and standard conditions of employment
04.03.01 Employment Law Employee Handbook Low
04.04 TUPE
04.04.01 TUPE analysis Medium
05 Corporate
05.01 Legal group structure High
05.02 Organisation chart Low
05.03 Memorandum and Articles of Association/overview of
shareholders (for all in scope entities)
Medium
05.04 Recent critical reports
05.04.01 [eg recent resolution plan, fair value reports or other recent
critical reports]
Low
06 Intellectual property
06.01 Brand information Low
07 Legal transaction documents
07.01 TSA High, if applicable
07.02 SPA High
08 Financial
08.01 Statutory accounts
08.01.01 Statutory accounts from the last three years Low
08.02 Management accounts
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Number Document Priority
08.02.01 Latest executive summary numbers Medium
08.02.02 Latest management accounts with historicals High
08.02.03 Latest TB Medium
08.03 Statutory accounts reconciled to management accounts
08.03.01 Statutory accounts to management accounts reconciliation Low
08.04 Exceptionals breakdown
08.04.01 Exceptionals breakdown (current and last financial years) Low
08.05 Balance sheet reconciliations
08.05.01 Intercompany
08.05.01.01 Intercompany reconciliation at x date Medium
08.06 Tax documents
08.06.01 Corporation tax returns
08.06.01.01 Entity 1 Low
08.06.01.02 Entity 2 Low
09 Procurement
09.01 Key commercial contracts Low
10 Operations
10.01 Operational Vendor Assistance packs Low
11 Capital
11.01 Information on risk weights to be provided as part of data tapes High
11.02 RWAs split by assets/portfolio High
11.03 Detail on current capital requirements and add-ons Medium
12 Pensions
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Number Document Priority
12.01 Assets and liabilities breakdown High, if in transaction
perimeter
13 Other
13.01 Legal compliance
13.01.01 Sector specific certificates and compliance confirmations Medium
13.01.02 Regulatory permissions confirmation Medium
13.01.03 Correspondence with regulator(s) Low
13.02 IT overview Low
13.03 Risk management
13.03.01 Guidelines Low
13.03.02 Procedures Low
13.03.03 Exposures Low
13.03.04 Internal reports Low

1. Foreign subsidiaries of UK banking groups are not in scope of statutory UK resolution powers, although such firms may
   fall within the scope of a group resolution strategy conducted by the home resolution authority in the foreign jurisdiction. For a diagram of the firms in scope of the UK resolution regime, refer to Figure 1 of the Bank’s approach to resolution (April 2026).

2. In certain circumstances, a preferred resolution strategy of transfer can also be set for firms with total assets below the
   £25 billion indicative threshold. Refer to the MREL SoP for further information.

3. A stabilisation power may be exercised in respect of a firm only if the PRA (or the FCA for solo-regulated investment
   firms) is satisfied that Condition 1 is met and the Bank is satisfied that Conditions 2, 3 and 4 are met. Condition 1 is that the firm is failing or likely to fail. Before determining that Condition 1 is met, the PRA must consult the Bank as resolution authority. Condition 2 is that, having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the firm that will result in Condition 1 ceasing to be met. Condition 3 is that the exercise of the stabilisation power is necessary having regard to the public interest in the advancement of one or more of the special resolution objectives. Condition 4 is that one or more of the special resolution objectives would not be met to the same extent by winding up the firm, whether under the Banking Act or otherwise. Before determining that Conditions 2, 3 and 4 are met, the Bank must consult the PRA, the FCA and HMT. Opens

4. Under section 58(1) of the Financial Services Act 2012, the Bank also has a duty to immediately inform HMT of any
   material risks to public funds.
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5. Where the urgency of the case makes it appropriate to exercise the transfer and any associated bail-in power before a
   valuation can be carried out by an independent valuer, the Bank may itself carry out a provisional valuation.

6. Resolution Procurement Framework 2023 – Find a Tender .
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7. If the firm has instruments admitted to trading on an EU trading venue, the requirement for the firm to send the
   notification on delayed disclosure of inside information to the FCA under Article 17(4) is separate to any additional obligation which the firm may have under EU MAR to notify any EU competent authority. The requirement to obtain FCA consent to a delay in disclosure of inside information under Article 17(5) is separate to any additional requirement to notify and seek the consent of any EU competent authority which may exist under EU MAR if the firm has instruments admitted to trading on an EU trading venue.

8. References to the ‘OpCo’ in this part are to the failed firm after transferring its shares to the HoldCo, although the Bank
   would expect to implement similar arrangements where the failed firm’s property, rights and liabilities are transferred to the HoldCo or to a subsidiary owned by the HoldCo (potentially through use of its AMV powers).

9. ‘Control’ means a person will hold >10% of share or voting power in the entity or shares/voting power which will enable
   the person to exercise significant influence over the management of the entity. A new change in control application must also be made by an existing controller if they wish to increase their ‘control’ in the following circumstances: (i) from less than 20% to 20%+; (ii) from less than 30% to 30%+; and (3) from less than 50% to 50%+. This is subject to any exemptions set out in The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009 . Opens

10. Section 191D of FSMA 2000 also sets out pre-notification requirements for disposing of shares. Opens

11. In accordance with section 213 of FSMA 2000, the compensation scheme may not allow the scheme manager to
    impose levies on credit unions in relation to recapitalisation payments under section 214E of FSMA 2000. Opens Opens

12. Resolution related expenses could include costs to recapitalise the firm but also cover associated resolution costs,
    including those incurred by the Bank or HMT in executing the resolution, operating a bridge bank or AMV and obtaining professional advisory, accountancy and legal advice. It may also include any compensation due to relevant parties under sections 49 to 62 of the Banking Act. The Bank will determine what is reasonable and prudent in a particular resolution scenario. Opens ©2026 Bank of England Opens