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Clause 111

Banking Bill – in a Public Bill Committee at 2:15 pm on 13th November 2008.

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Transfer of accounts

Question proposed, That the clause stand part of the Bill.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

This is a slightly odd question, but does the acquirer have to make a payment to recognise the economic value of the accounts being transferred from the failed bank to a new institution? Of course, in accounting terms they would be transferred at their book value, but the acquiring institution will gain economic value from them, because it has picked up a new raft of current or depositor accounts and some may be profitable, even in these straitened times.

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

My understanding is that that might be the case but it would be the subject of negotiation and agreement. That has already occurred in previous instances and it is likely to occur again, but it will be dependent upon circumstances.

Photo of Mark Hoban Mark Hoban Shadow Minister (Treasury)

Presumably, the profit made from the difference between the book value and the economic value will be used to offset the costs incurred by the FSCS.

Question put and agreed to.

Clause 111 ordered to stand part of the Bill.