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Banking Bill

I am grateful to both noble Lords, in particular the noble Viscount, Lord Eccles, for asking me to spell out what Clause 12 represents. It is a tall order, as I am sure he will recognise. One feels more comfortable when one has specific amendments to which one can address responses. Covering the whole clause would delay the House for an inordinate amount of time. However, I will give as full an explanation as I can, consistent with respect for parliamentary procedure. I begin by responding to the noble Lord, Lord Higgins. The noble Viscount, Lord Eccles, asked the same question, which is important to this clause: ““What is an ‘onward bridge bank’””? I will tackle that first. The concept of the onward bridge bank, which is as new as that of the bridge bank itself, is that the Government are seeking a high degree of flexibility to allow the Bank of England to carry out any necessary restructuring. After the initial transfer to the bridge bank, it is possible that the Bank of England may wish to transfer some or all of the bridge bank’s business to another company that it owns. It might wish to do this, for example, if it wishes to split up the business prior to selling it. Under subsection (4), if property, rights or liabilities are transferred in this way, the new company is called an ““onward bridge bank””. That is the concept behind that particular term. I hope that noble Lords will recognise that we are talking about difficult circumstances for the Bank of England. I will deal later with the time constraints under which we are working, and how open the procedure is. The House will appreciate how the Bank of England, when it takes over a failing enterprise, must then create circumstances where it can meet the criteria of the rubric that the Opposition constantly enjoin upon us, and which the Government also accept—that there is no intention to take banks into public ownership, except when they are in such serious difficulties that that is the only possibility. Therefore, when the Bank of England takes responsibility for a bank, it must be able to make arrangements for disposing of it in due course, and returning to the private sector that part of the operation that may be viable and for which people will bid. The concept of the bridge bank is fundamental to Clause 12.