Clause 1
Banking Bill
10:30 am
Ian Pearson (Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
It is a pleasure to serve under your chairmanship, Mr. Gale. As you are aware there are good reasons why we have only now reached clause 1, but it is the meat of the Bill in terms of the special resolution regime. I shall take a limited amount of time to set the scene because clause 1 gives us a good overview of the framework of the regime tools.
The clause sets out the broad purpose of the SRR, which is to address a situation in which all or part of the business of a bank has encountered or is likely to encounter financial difficulties. It outlines the tools at the authorities’ disposal under the SRR. The special resolution regime includes the three stabilisation options: transfer to a private sector purchaser, to a bridge bank and to temporary public sector ownership. As the Committee will hear when we consider clauses 13 to 24 and 30 to 38, the stabilisation options are exercised through the stabilisation powers, which effect the transfer of shares and other securities or property, rights and liabilities by operation of law. Those stabilisation powers include the onward and supplemental transfer powers set out in clauses 25 to 29 and 39 to 41.
Clauses 42, 43 and 55 provide for a package of safeguards relating to the exercise of partial property transfer powers, which, as Members are aware, proved of particular interest to stakeholders during the public consultation process. I draw attention to the safeguards here because the Government will be issuing a consultation document on them, as I indicated in my letter to Committee members last week, as well as the draft code of practice, which the Committee has seen, on Thursday of this week.
I have established an expert liaison group of banking sector practitioners, including legal and insolvency experts, to advise the Government on the development of the safeguards. The group held its first meeting last Friday, and the consultation document that we publish on Thursday will reflect its views on the Government’s proposals. It will also have a key role in continuing to advise the Government through the process of consultation and beyond. Yesterday I tabled a new clause on the position of the liaison group, and we will debate that in due course.