Banking (Special Provisions) Act 2023 · As enacted · Part II · Resolution Measures
31. Management of the affairs of the bridge bank
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
The bridge bank established under section 30 shall be a body corporate and may sue or be sued by its corporate name.
The management and administration of the affairs of the bridge bank shall be vested in a governing body of the bridge bank which shall consist of such number of members as may be determined by the Central Bank.
The members of the governing body of the bridge bank shall be fit and proper persons and shall be appointed by the Central Bank. The Central Bank shall, based on the criteria referred to in paragraph (f) of subsection (11), assess the fitness and propriety of persons to be appointed as members of the governing body prior to their appointment.
The key management personnel of the bridge bank shall, subject to the provisions of paragraph (f) of subsection (11), be appointed by the governing body of the bridge bank, subject to the approval of the Central Bank.
Notwithstanding anything to the contrary in any other written law, any officer of the Central Bank shall not be appointed as a member of the governing body or as a key management personnel of the bridge bank.
The capital of the bridge bank shall be fully provided by the Government subject to appropriation of necessary funds in terms of any applicable written law. The Government shall have the right to decide on the issuance of Government guarantees and Government securities in connection with the financing of the bridge bank:
Provided however, nothing contained in this section shall be construed as preventing the Central Bank from extending emergency liquidity assistance, conventional market liquidity injecting mechanisms or loans to the bridge bank:
Provided further, provision of capital to a bridge bank by the Government under this section shall not prevent the
Central Bank from exercising control over such bridge bank.
The Central Bank shall ensure that the bridge bank shall be subject to standard prudential rules in line with the international standards and best practices.
The terms and conditions for the establishment and operation of a bridge bank shall include –
the provision of capital;
operational financing and liquidity support;
any temporary changes to prudential and other supervisory and regulatory requirements that apply to the bridge bank, for a period up to six months;
the requirement of setting out governance framework; and
the board of directors and the management of the bridge bank.
For the purpose of this section, the Central Bank shall have the power to -
transfer to the bridge bank, from time to time, shares, assets, liabilities or other instruments of ownership, as the case may be, issued by the licensed bank subject to resolution;
subject to the provisions of subsection (8), reverse the transfer of all or part of the assets and liabilities from the bridge bank to the licensed bank subject to resolution;
transfer shares, assets and liabilities, legal rights and obligations, from the bridge bank to any other person subject to an eligibility criteria determined by the Central Bank by directions, for such purpose;
and
facilitate the closure and orderly winding up of the bridge bank.
The reversal of transfer of shares, assets and liabilities, legal rights and obligations and any other instruments of ownership under subsection (7), to the licensed bank subject to resolution shall be performed in one of the following circumstances: -
where the possibility of such reversal is expressly provided for in the decision to establish a bridge bank referred to in subsection (1) of section 30;
where the shares, assets and liabilities, legal rights and obligations and any other instrument of ownership transferred to the bridge bank from the licensed bank subject to resolution do not meet the conditions of such transfer or do not fall into the categories of shares, assets and liabilities, legal rights and obligations and any other instruments of ownership specified in the decision to establish the bridge bank; or
where it is necessary to rectify the valuation errors that took place at the time of transfer of shares, assets and liabilities, legal rights and obligations and other instruments of ownership.
The transfer of shares, assets and liabilities, legal rights and obligations and other instruments of ownership to and from the bridge bank shall be based on a valuation carried out by an independent professional valuer possessing such qualifications and experience referred to in subsection (1)
of section 16.
Any shareholder or creditor of a licensed bank subject to resolution and other third party whose shares, assets and liabilities, legal rights and obligations and other instruments of ownership are not transferred to the bridge bank shall not have any right over the shares, assets and liabilities, legal rights and obligations and other instruments of ownership transferred to the bridge bank, its governing body, or the
Central Bank.
The Central Bank may, from time to time, having regard to the interests of depositors, creditors and shareholders, issue to the bridge bank, directions, guidelines, and operating instructions, as the case may be, specifying-
the manner in which the remaining assets and liabilities of the licensed bank subject to resolution need to be liquidated;
the manner in which the operations of the bridge bank shall be carried out;
the exemptions granted to the bridge bank:
minimum capital and liquidity requirements to be met by the bridge bank;
principles of corporate governance to be applicable to the bridge bank;
the criteria applicable for the assessment of fitness and propriety of the members of the governing body and the key management personnel of the bridge bank;
criteria for acceptability of the valuations of assets and liabilities to be transferred to the bridge bank;
modes of consideration to be passed when transferring assets and liabilities, legal rights and obligations and instruments of ownership; or
the manner and the circumstances of reversals of assets and liabilities and other instruments of ownership initially transferred to the bridge bank.
Part III
Sri Lanka Deposit Insurance Scheme
Part IV
Financial Sector Crisis Management Committee
Part V