Clause 3
Banking Bill
12:15 pm
Ian Pearson (Parliamentary Under-Secretary, Department for Business, Enterprise & Regulatory Reform; Dudley South, Labour)
On the recapitalisation scheme, the Government believe that assistance under it should not be of a type that would trigger certain provisions of the Bill—for instance, the provision for taking a bank into temporary public sector ownership. Nor should system-wide financial assistance, including the recapitalisation scheme, be treated as financial assistance for the purposes of the FSA’s assessment of whether the threshold conditions have been met.
The purpose of the recapitalisation scheme is to recapitalise banks and place them on a more secure financial footing. It would therefore be inappropriate if access to the scheme impacted on triggers for the use of the SRR powers. However, that does not mean that it will be excluded from the definition of financial assistance for all the purposes of the Bill. For instance, in some cases, access to the recapitalisation scheme may be relevant in determining compensation.
The special liquidity scheme has been mentioned. It does not fall within the definition of financial assistance, but it is not clear whether such system-wide assistance should be treated as financial assistance for the purposes of the trigger mechanisms in the Bill, including the determination by the FSA of whether a bank meets its threshold conditions.