Summary
6.The Banking (Special Provisions) Act gives the Treasury powers to transfer the ownership or business of UK authorised deposit-takers (which for these purposes are UK-incorporated banks and building societies). The Treasury may make an order to transfer the securities (including shares) or business of a particular deposit-taker either into public ownership, or to another body in the private sector. In relation to any such transfer, provision may be made to deal with supplementary issues concerning the deposit-taker (or the securities or property, rights and liabilities transferred). The Treasury may also, by order, transfer a deposit-taker, or all or some of the property, rights and liabilities, brought into public ownership back to the private sector.
7.The Act also enables the Treasury, by order, to amend legislation so as to facilitate the giving of financial assistance by the Bank of England to building societies.
8.The outline of the Act is as follows:
Introduction – sections 1 and 2 define the circumstances in which, and the purposes for which, the Treasury’s powers to transfer the securities or property, rights and liabilities of a deposit-taker are exercisable and set out which institutions qualify for purposes of those powers;
Transfer of securities – sections 3 to 5 and Schedule 1 deal with the power to transfer shares and other securities to the Bank of England, the Treasury, a company owned by the Treasury or the Bank of England, or any other body corporate; provide powers for the Treasury to extinguish certain rights in relation to such securities; and require the Treasury to make provision, in an order, for determining the amount of any compensation or consideration payable to the holders of such securities and to those whose rights have been extinguished;
Transfer of property etc. – sections 6 and 7 and Schedule 2 deal with the power to transfer property, rights and liabilities of a deposit-taker to a company owned by the Bank of England, the Treasury or to any other body corporate; and require the Treasury to make provision, in an order, for determining the amount of any compensation or consideration payable to the deposit-taker;
Further transfers – section 8 provides powers for the onward transfer of securities or property etc transferred to the public sector by an order under section 3 or 6;
Supplementary matters – section 9 contains supplementary provisions about compensation orders, including in relation to procedural matters; section 10 enables the Treasury to make provision in relation to tax in connection with the exercise of powers in the Act;
Building societies – section 11 gives the Treasury a power to modify legislation to facilitate the giving of certain financial assistance by the Bank of England to building societies;
General – sections 12 to 17 are general provisions concerning consequential and supplementary provision, orders and regulations made under the Act, interpretation, financial provision and extent; they include provision to modify primary and secondary legislation and make a limited form of retrospective provision.
The powers in sections 3 and 6 to transfer securities or property, rights and liabilities of a deposit-taker to the public or private sector may only be exercised in the period of one year from the date of Royal Assent (see section 2(8)).