In the recent judgment in In the Matter of the Representation of Standard Chartered (Jersey) Limited  JRC 172, the Royal Court considered whether the Banking Business (Jersey) Law 1991 (the Banking Law), which allows for the transfer of deposit-taking business, extends to the transfer of regulated investment business. The Court found that in appropriate cases it has jurisdiction to sanction a transfer of investment business.
The Banking Law was amended in 2008 to allow for transfers of deposit-taking business between entities by way of a Court-sanctioned scheme. Before this change transfers were effected by private law. The old process was time-consuming and costly. The first transfer under the Banking Law, from Bank of Scotland, Jersey Branch to Lloyds TSB, did not take place until 2011. While the Standard Chartered application is only the second since the law was amended, it is likely that regulatory reforms and in particular the requirements of the Financial Services (Banking Reform) Bill for the UK banks to be ring-fenced will make bank reorganisations involving Jersey branches and entities more common.
The process for transferring a deposit-taking business includes:
- sending to all customers and members of the transferring and transferee banks a summary terms of the scheme and of an independent auditor’s report addressing the likely effects of the scheme
- publishing a notice in the Jersey Gazette stating that an application has been made to sanction the transfer and making available and the auditor's report for inspection in Jersey for at least 21 days from the date of the notice
- serving the Jersey Financial Services Commission with a copy of the application, the auditor's report at least 21 days before the hearing
- depositing two official copies of the order of the Royal Court with the Commission within 10 days of the sanction hearing
The main documents involved are:
- the independent auditor’s report
- a statement of terms of Jersey scheme
- a summary of independent auditor’s report
- the Jersey Gazette notice
- representations covering the application for sanction
- affidavits in support of hearing
As well as deposit-taking business, most Jersey banks are also licensed to conduct investment business. Some hold other licenses, for instance for trust company business. The Standard Chartered judgment is helpful to the extent that it clarifies that other regulated activities may be transferred under the Banking Law alongside the deposit-taking business provided that the non-deposit taking activities are integral to the business. Otherwise a private law would be required.