HBOS plc is a banking and insurance holding company and was created on September 10, 2001 from the merger of the Governor and Company of the Bank of Scotland and Halifax plc. These two banks are the main UK subsidiaries of HBOS, although they themselves operate various other subsidiary companies. The Bank of Scotland was incorporated by an Act of the Parliament of Scotland in 1695, and operates under the authority of this Act and subsequent other Acts passed in 1873, 1920, 1954 and 1970. Halifax is a public limited company and was created in 1997 from the demutualisation of the Halifax Building Society to plc status.
The main aim of the Act is to simplify HBOS’s operating structure, namely:
The Governor and Company of the Bank of Scotland was unusual in its legal structure, as it was a company formed under statute, the 1695 Act, and was governed under the provisions of that Act and successive Acts of Parliament relating to the Bank. The most important was the Bank of Scotland Act 1920, which set out the bank's business objectives and its regulations.
HBOS Group wished to restructure the Bank into a plc governed under the Companies Act 1985, and transfer the assets and liabilities of its other UK subsidiaries with a banking licence (Capital Bank, Halifax plc and HBOS Treasury Service plc) to the new Bank of Scotland plc. By doing it could save the costs of maintaining four banking licences, and the need for four separate companies, each with their own board of directors.
The transfer of assets and liabilities from one bank to another also requires the consent of the account holders. For institutions such as the Halifax, this would involve seeking the consent of millions of people, and would be impractical. Thus an Act of Parliament gives HBOS the statutory authority to transfer accounts without seeking individual account holder approval.
The Act also transferred to the new entity the right of the Bank of Scotland to print banknotes.