Banking (Special Provisions) Act 2023 · As enacted · Part II · Resolution Measures
26. Transfer of selected assets and liabilities to a third party
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
Subject to the provisions of subsection (5), the
Central Bank may, after giving a prior notification to the licensed bank subject to resolution (in this Part of this Act referred to as the “transferor bank”), transfer all or part of the assets or liabilities, or both such assets and liabilities of such transferor bank prevailing as at a specific date (in this
Part of this Act referred to as the “relevant date”), to any third party (in this Part of this Act referred as the “transferee”):
Provided however, where such liabilities or part thereof consist of deposit liabilities, such deposit liabilities shall not be transferred to any entity which is not permitted by law to accept deposits.
The transferee referred to in subsection (1) shall be solvent, and shall comply with applicable requirements under the Banking Act or any regulation, direction, determination, or Order made or issued thereunder, including the requirements relating to the suitability of qualifying shareholders, directors and key management personnel, and shall have sufficient expertise, capacity and resources to effectively hold the assets or liabilities or both such assets and liabilities so transferred to achieve the objectives of resolution.
The transfer of assets and liabilities under subsection (1) shall be conducted by the Central Bank based on a prudent and realistic valuation of the selected assets and liabilities of such licensed bank, carried out by an independent professional valuer possessing such qualifications and experience referred to in subsection (1)
of section 16.
The Central Bank may, by way of directions issued from time to time, specify the criteria for the selection of assets and liabilities to be transferred under subsection (1), having regard to the interests of depositors, creditors, and shareholders of such licensed bank.
For the purpose of subsection (1), “assets and liabilities of a transferor bank” includes,-
all or part of the immovable and movable property owned by the transferor bank on the day immediately preceding the relevant date (including loans, cash balances, reserve funds, investments and deposits);
all or part of the rights, powers, privileges, authorities, and interests arising in, or out of, any property, movable or immovable, owned by the transferor bank on the day immediately preceding the relevant date;
any legal rights or obligations of the transferor bank subsisting on the day immediately preceding the relevant date;
subject to the provisions of paragraph (e) of section 28, all or part of the liabilities including legal rights and obligations of the transferor bank subsisting on the day immediately preceding the relevant date;
and
all books, accounts and documents relating, or appertaining, to such transferor bank in Sri Lanka.
The transferee referred to in subsection (1) shall-
not be controlled, directly or indirectly, by related parties of the transferor bank;
only be liable to the shareholders or other creditors of the transferor bank for those liabilities expressly transferred, or in accordance with any other terms or conditions expressly agreed to by the transferee, to the exclusion of any other responsibilities including liabilities related to taxes and liabilities related to the labour;
be responsible for compensating the Central Bank or the Deposit Insurance Scheme established under section 39 for any losses caused due to the transferee’s failure to comply with the terms and conditions of the transfer of assets and liabilities in resolution.
Part III
Sri Lanka Deposit Insurance Scheme
Part IV
Financial Sector Crisis Management Committee
Part V