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Clause 32

Part of Banking Bill – in a Public Bill Committee at 11:15 am on 11th November 2008.

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Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury 11:15 am, 11th November 2008

It is important that a property transfer instrument is able to transfer all of a failing bank’s property. If a crucial element of a bank’s business were left behind, that could jeopardise the effectiveness of the transfer. If a private sector purchaser believed that to be a material risk, it might not agree to take part in the transaction. With a property transfer to a bridge bank, if some property could not be transferred, that might reduce the likelihood of an ultimate sale or increase the risk to public funds. That is why the clause is particularly necessary.

The inclusion of foreign property in the scope of the clause is crucial, given the international and multi-jurisdictional nature of many of the UK's banks. At the moment, I do not have a direct answer to the arbitration point raised by the hon. Gentleman, but we can discuss it further under clause 36 and the obligations there, because we need to ensure that a transfer of foreign property is effective. Overall, the clause underpins the effectiveness of the Bill’s property transfer powers, and I urge that it stand part of the Bill.