Banking (Special Provisions) Act 2008

5 Compensation etc. for securities transferred etc.

(1) The Treasury must by order—

(a) in relation to an order under section 3 that transfers securities only to the public sector, make a scheme for determining the amount of any compensation payable by the Treasury to persons who held the securities immediately before they were so transferred;

(b) in relation to an order under section 3 that transfers securities only to a private sector body, make provision for determining the amount of any consideration payable by the body to persons who held the securities immediately before they were so transferred;

(c) in relation to an order under section 3 that transfers securities both to the public sector and a private sector body, make provision for determining—

(i) the amount of any compensation payable by the Treasury, and

(ii) the amount of any consideration payable by the private sector body concerned,

to persons who held the securities immediately before they were so transferred.

(2) The Treasury must by order make provision for determining the amount of any compensation payable to persons whose rights are extinguished by virtue of an order under section 4 (a “section 4 order”) and—

(a) in any case where the section 4 order is made in consequence of an order under section 3 that transfers securities only to the public sector, the order must provide for any compensation to be payable by the Treasury;

(b) in any case where the section 4 order is made in consequence of an order under section 3 that transfers securities only to a private sector body, the order must provide for any compensation to be payable by the private sector body concerned;

(c) in any case where the section 4 order is made in consequence of an order under section 3 that transfers securities both to the public sector and a private sector body, the order must make provision for determining the amount of any compensation payable by the Treasury or the private sector body concerned (or both).

(3) An order under this section may also make provision for extending provisions of the order, in any specified circumstances, to persons otherwise affected by any provision made in an order under section 3 or 4.

(4) In determining the amount of any compensation payable by the Treasury by virtue of any provision in an order under this section, it must be assumed—

(a) that all financial assistance provided by the Bank of England or the Treasury to the deposit-taker in question has been withdrawn (whether by the making of a demand for repayment or otherwise), and

(b) that no financial assistance would in future be provided by the Bank of England or the Treasury to the deposit-taker in question (apart from ordinary market assistance offered by the Bank of England subject to its usual terms).

(5) For the purposes of subsection (4)—

(a) the references to the provision of financial assistance by the Treasury to the deposit-taker include any case where the Chancellor of the Exchequer announces that the Treasury (whether acting alone or with the Bank of England) would, if necessary, put in place relevant guarantee arrangements in relation to the deposit-taker (as well as any case where any such arrangements are put in place, whether or not following such an announcement);

(b) “ordinary market assistance” means assistance provided as part of the Bank’s standing facilities in the sterling money markets or as part of the Bank’s open market operations in those markets.

(6) It is immaterial whether the announcement mentioned in subsection (5)(a) is made before or after the passing of this Act.

(7) In this section—

(a) any reference to any transfer of securities to the public sector is a reference to the transfer of any securities to any person within paragraphs (a) to (c) of subsection (1) of section 3;

(b) any reference to any transfer of securities to a private sector body is a reference to the transfer of any securities to any body corporate within paragraph (d) of that subsection.

(8) An order under subsection (1) or (2) must be made within the period of 3 months beginning with—

(a) the day on which the order under section 3 is made (in the case of an order under subsection (1)), or

(b) the day on which the order under section 4 is made (in the case of an order under subsection (2)).

(9) But nothing in subsection (8) prevents the making, at any time after the end of that period, of a second or subsequent order under this section in relation to the order under section 3 or 4.