Banking Bill

As I said yesterday, certainly in relation to RBS, HBOS and Lloyds, capitalisation was by the Government investing capital in those banks. The other banks have decided to proceed in a variety of ways, as I set out. Clause 65 of the Bill gives us powers to disapply various pieces of legislation. I want to make it clear that that will be done only in pursuit of the powers necessary to make the Bill work—for example, in relation to the competition regime or to modify insolvency legislation. I dare say that the clause, like other parts of the Bill, will be discussed in Committee, and if there are improvements that we can make, we will do that. Briefly, part 3 deals with the administration procedure in case it is necessary to provide services from one part of a bank to another part that has been transferred to another party. Part 2 also means that any liquidator who is appointed will have to work with the Financial Services Compensation Scheme to ensure prompt payouts to depositors. Part 4 deals with the FSCS. Clause 156 deals with the issue of pre-funding. My view is that in an ideal world the schemes would be pre-funded because when a claim is made against them, the chances are that it will not be the only claim by the only institution. To have funds available already would clearly be sensible. However, for us to attempt to pre-fund the FSCS in the current climate would exacerbate an already difficult situation. I made that clear in connection with what we did with Bradford & Bingley, and I hope that the House will support me on that. There is also provision in the Bill in relation to Scottish bank notes. We had extensive discussions with the issuers of Scottish notes and Northern Irish notes. We want to bring the law in Scotland into line with the law in the rest of the United Kingdom so that, put simply, the holder of a Scottish bank note can expect to obtain the full face value of the note in the event of the bank getting into difficulty. That was not the case before; it is now the case. That is why we are making this change. It has the agreement of the Scottish and Northern Irish banks, and I hope that the House will approve it.