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Clause 48

Banking Bill – in a Public Bill Committee at 5:15 pm on 11th November 2008.

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Onward transfer

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

I beg to move amendment No. 102, in clause 48, page 22, line 13, at end insert—

‘(aa) the Treasury makes a reverse share transfer order under section [Reverse share transfer],’.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

With this it will be convenient to discuss Government amendments Nos. 103 to 105.

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

These are technical amendments to ensure that compensation provisions are in place for the new transfer powers that we have taken under Government amendments Nos. 92 to 97 and new clauses 10 to 13. The amendments ensure that compensation orders and third party compensation orders can be made for supplemental and reverse share and property transfers—which I spoke about last Thursday and earlier today—as is the case where onward transfer powers are exercised. The amendments are necessary to ensure that consistent compensation provisions are in place throughout the Bill. I request, therefore, that hon. Members support the amendments, which I stress are technical and for consistency purposes.

Amendment agreed to.

Amendments made: No. 103, in clause 48, page 22, line 15, at end insert—

‘(ba) the Bank of England makes a bridge bank reverse share transfer instrument under section [Bridge bank: reverse share transfer],’.

No. 104, in clause 48, page 22, line 17, leave out ‘or’ and insert—

‘(ca) the Bank of England makes a reverse property transfer instrument under section [Reverse property transfer],’.

No. 105, in clause 48, page 22, line 18, at end insert—

‘, or

(da) the Treasury make a reverse property transfer order under section [Temporary public ownership: reverse property transfer],’.—[Ian Pearson.]

Photo of David Gauke David Gauke Shadow Minister (Treasury) 5:30 pm, 11th November 2008

I beg to move amendment No. 146, in clause 48, page 22, line 21, at end insert

‘(which may, in particular, make provision in respect of specified classes of creditor, for rights in addition to any they may have by virtue of any resolution order).’.

Photo of Jimmy Hood Jimmy Hood Labour, Lanark and Hamilton East

With this it will be convenient to discuss amendment No. 147, in clause 52, page 24, line 40, at end insert ‘or to third parties.’.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

The amendments are largely a drafting matter. There is no a particular dispute about the policy element. Amendment No. 146 relates to clause 48 and attempts to elaborate further what should be contained within a third-party compensation order. It aims to be helpful and provide some clarity to the existing wording. Amendment No. 147 is a rather short amendment to clause 52(5), which reads:

“There is nothing to prevent the application of the valuation principles in an order from resulting in no compensation being payable to a transferor.”

Presumably the same point applies to third parties, which is why the amendment would add the phrase “or to third parties”. Both amendments add something to the Bill, particularly amendment No. 147, which provides helpful clarification.

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

I believe that the purpose of amendment No. 146 is to ensure that rights arising from provision made for compensation by way of a third-party compensation order are in addition to those rights conferred on a third party under a bank resolution scheme order. The amendment is inappropriate as the Treasury does not have the power to make provision for bank resolution funds for onward transfers.

In addition, in relation to any rights arising by way of a bank resolution fund that has been put in place in respect of the initial transfer of property to the bridge bank or bank in temporary public ownership, any provision for compensation for interferences in third-party rights arising under an onward transfer compensation scheme order will relate to separate and unrelated interferences in property rights.

Amendment No. 147 proposes that clause 52(5) should also make reference to third parties. However, as subsection (5) is applied to third parties by clause 54(3), the courts would construe that clause to refer to third parties. The amendment is simply not needed, so I ask the hon. Gentleman to consider withdrawing it.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I will take the Minister at his word on amendment No. 146 but I am not sure that I quite understand his argument on amendment No. 147. If he is saying that the courts will interpret subsection (5) as applying to third parties, notwithstanding the fact that the clause specifically mentions the transferor but does not say “or to third parties”, the amendment seems helpful. I do not see why he does not accept it. It seems that subsection (5) will apply to third parties, and if it does I see no reason why it should not say so, given that it specifies transferors.

I am loth to divide the Committee on this point, because it does not seem to be anything other than a technical one, and I am surprised that the Minister has not accepted it. However, I am in a generous mood. Perhaps I will allow him to ponder whether he might reconsider later and accept my amendment.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 48, as amended, ordered to stand part of the Bill.