A bill to Make provision about recapitalisation costs in relation to the special resolution regime under the Banking Act 2009.
Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
1 Recapitalisation payments¶
In Part 15 of the Financial Services and Markets Act 2000 (the Financial Services Compensation Scheme), after section 214D insert—214E Recapitalisation payments
(1) The Bank of England may require the scheme manager to make a recapitalisation payment to the Bank or another person where the Bank has exercised or decided to exercise a stabilisation power under Part 1 of the Banking Act 2009 in respect of a financial institution so as to achieve— (a) a sale of the institution to a private sector purchaser (see section 11 of that Act), or (b) a transfer of the institution to a bridge bank (see section 12 of that Act). (2) A recapitalisation payment is a payment in respect of the Bank’s estimate of— (a) the costs likely to be required for the recapitalisation of the financial institution, and (b) any other expenses that the Bank or another person has incurred or might incur in connection with the recapitalisation of the institution or the exercise of the stabilisation power. (3) Before exercising the power in subsection (1), the Bank must consult the scheme manager. (4) A recapitalisation payment made by the scheme manager under subsection (1) is to be treated for the purposes of this Part as an expense under the compensation scheme. (5) In this section and in section 214F, “financial institution” means a bank, building society or investment firm (within the meanings of Part 1 of the Banking Act 2009).
2 Reimbursement in respect of recapitalisation payments¶
In Part 15 of the Financial Services and Markets Act 2000, after section 214E (as inserted by section 1) insert—214F Reimbursement in respect of a recapitalisation payment
(1) The Bank must reimburse the scheme manager for any recapitalisation payment, or any part of a recapitalisation payment, relating to a financial institution, which is not needed to cover the costs and expenses mentioned in section 214E(2)(a) and (b) because— (a) those costs and expenses were lower than the Bank expected, or (b) the Bank recovers an amount in relation to the financial institution which it can use to defray those costs and expenses. (2) For the purposes of subsection (1)— (a) the reference to the Bank recovering an amount in relation to the financial institution includes recovering an amount as a result of the sale of the institution or the institution being wound up or otherwise; (b) where more than one recapitalisation payment is required in relation to a financial institution, references to a recapitalisation payment are to be read as references to the sum of those payments; (c) the reference to the sale of a financial institution in paragraph (a) is to the sale of all or part of the business of the financial institution as part of, or as a result of, the achievement of a stabilisation option.
3 Amendments to the Financial Services and Markets Act 2000¶
(5A) The compensation scheme may not allow the scheme manager to impose levies on credit unions in relation to recapitalisation payments under section 214E. (5B) In subsection (5A), the reference to “credit unions” is to credit unions within the meaning of— (a) the Credit Unions Act 1979 (see section 31); (b) the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)) (see Article 2).
.(ca) under section 214E;
4 Amendments to the Banking Act 2009¶
.(c) any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E (recapitalisation costs) of the Financial Services and Markets Act 2000,
(1A) Where the Bank of England requires a recapitalisation payment to be made under section 214E of the Financial Services and Markets Act 2000 in respect of a specified bank, a share transfer instrument may include provision requiring the specified bank to issue securities.
(3A) In subsection (3), “financial assistance” includes any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E (recapitalisation costs) of the Financial Services and Markets Act 2000.
(2A) In subsection (2), “public financial assistance” includes any amount in respect of which the Bank of England may require a recapitalisation payment under section 214E (recapitalisation costs) of the Financial Services and Markets Act 2000.
(4) This section does not apply where the Bank of England has required, or decided to require, a recapitalisation payment under section 214E (recapitalisation costs) of the Financial Services and Markets Act 2000.