Banking Act 1987 (repealed)

60 Protected deposits. U.K.

(1) Subject to the provisions of this section, in relation to an institution in respect of which a payment falls to be made under section 58(1) above any reference in this Act to a depositor’s protected deposit is a reference to the total liability of the institution to him immediately before the time when it becomes insolvent, limited to a maximum of £20,000, in respect of the principal amounts of and accrued interest on sterling deposits made with United Kingdom offices of the institution.

(2) Subject to the provisions of this section, in relation to an institution in respect of which a payment falls to be made under section 58(2) above any reference in this Act to a depositor’s protected deposit is a reference to the liability of the institution to him in respect of—

(a) the principal amount of each sterling deposit which was made by him with a United Kingdom office of the institution before the making of the administration order and which under the terms on which it was made is or becomes due or payable while the order is in force; and

(b) accrued interest on any such deposit up to the time when it is or becomes due and payable as aforesaid;

but so that the total liability of the institution to him in respect of such deposits does not exceed £20,000.

(3) For the purposes of subsection (1) above no account shall be taken of any liability unless—

(a) proof of the debt which gives rise to it has been lodged with the liquidator of the insolvent institution; or

(b) in the case of an institution formed under the law of a country or territory outside the United Kingdom, an act has been done which appears to the Board to correspond as nearly as may be to the lodging of such a proof with the liquidator of the institution.

(4) For the purposes of subsection (2) above no account shall be taken of any liability unless a claim for repayment of the deposit which gives rise to it has been lodged with the administrator.

(5) The Treasury may, after consultation with the Board, by order amend subsections (1) and (2) above so as to substitute for the sum for the time being specified in those subsections such larger sum as may be specified in the order; but no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

(6) In determining the total liability of an institution to a depositor for the purposes of subsection (1) above, or the liability or total liability of an institution to a depositor for the purposes of subsection (2) above, no account shall be taken of any liability in respect of a deposit if—

(a) it is a secured deposit; or

(b) it is a deposit which had an original term to maturity of more than five years; or

(c) the institution is a former authorised institution and the deposit was made after it ceased to be an authorised institution or a recognised bank or licensed institution under the M1 Banking Act 1979 unless, at the time the deposit was made, the depositor did not know and could not reasonably be expected to have known that it had ceased to be an authorised institution, recognised bank or licensed institution.

(7) Unless the Board otherwise directs in any particular case, in determining the total liability of an institution to a depositor for the purposes of subsection (1) or (2) above there shall be deducted the amount of any liability of the depositor to the institution—

(a) in respect of which a right of set-off existed immediately before the institution became insolvent or, as the case may be, subject to the administration order against any such sterling deposit as is referred to in subsection (1) or (2) above; or

(b) in respect of which such right would then have existed if the deposit in question had been repayable on demand and the liability in question had fallen due.

(8) Where an institution becomes insolvent after an administration order has been in force in relation to it the maximum applying under subsection (1) above to a depositor’s protected deposit with the institution shall be reduced by the amount of his protected deposit or deposits with the institution taken into account for the purposes of subsection (2) above.

(9) For the purposes of this section and sections 61 and 62 below the definition of deposit in section 5 above—

(a) shall be treated as including—

(i) any sum that would otherwise be excluded by paragraph (a), (d) or (e) of subsection (3) of that section if the sum is paid as trustee for a person not falling within any of those paragraphs;

(ii) any sum that would otherwise be excluded by paragraph (b) or (c) of that subsection;

(b) subject to subsections (10) and (11) below, shall be treated as excluding any sum paid by a trustee for a person falling within paragraph (e) of subsection (3) of that section; and

(c) shall be treated as including any sum the right to repayment of which is evidenced by a transferable certificate of deposit or other transferable instrument and which would be a deposit within the meaning of section 5 as extended by paragraph (a) and restricted by paragraph (b) above if it had been paid by the person who is entitled to it at the time when the institution in question becomes insolvent.

(10) Where the trustee referred to in paragraph (b) of subsection (9) above is not a bare trustee and there are two or more beneficiaries that paragraph applies only if all the beneficiaries fall within section 5(3)(e) above.

(11) Subsection (10) above does not extend to Scotland and, in Scotland, where there are two or more beneficiaries of a trust the trustee of which is referred to in paragraph (b) of subsection (9) above that paragraph applies only if all the beneficiaries fall within section 5(3)(e) above.

Modifications etc. (not altering text)

C1 S. 60 amended (31.07.1991) by S.I. 1991/1776, art. 2(1)(2)

C2 S. 60 amended (1.1.1993) by S.I. 1992/3218, reg. 47, Sch. 8 para. 16.

Marginal Citations

M1 1979 c. 37.