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Banking Bill

I note that the noble Baroness, Lady Noakes, said that this is a probing amendment. There is not a great deal of difference between us on this point and the noble Baroness is right to refer to the European convention. Dealing first with the point made by the noble Lord, Lord Higgins, I repeated the Chancellor of the Exchequer’s Statement in the other place earlier in which there was a clear statement that the Government’s view is that banks are best in the private sector and best run on a commercial basis. We have no interest as a matter of policy in taking control of a bank for even the shortest period. However, the Bill contemplates circumstances in which that may, through force of what has happened, become necessary. The noble Lord made an interesting observation about the size of the financial services sector and whether there is a point at which it can be too large for an economy. Some of the work that I am doing in a group chaired by the Chancellor of the Exchequer and Sir Win Bischoff on the financial services market and its future addresses this, among a number of other issues. I believe that those are matters to which this House and the other place may wish to return. We were blessed in the past, because of the prudent and cautious management of our great financial institutions, our banks and insurance companies, to be a major provider of banking and other financial services to the world. That has been a source of strength. At the moment, it is not obviously clear that that remains the case. I say to the noble Lord, Lord Higgins, that there is no inconsistency between maximising the value of the business and maximising the proceeds. To put a bank in a safe, secure and commercially strong position is good not only for the customers, but for the owners of the bank before it was put into a resolution regime. I hope that there is no inconsistency here, but the noble Lord is right to draw attention to the inevitable challenges that will arise. The purpose of Amendments 100 and 102 would appear to be to remove the power of the Treasury to specify, in a bank resolution fund order, that the Bank of England or the Treasury must ensure that a bridge bank, or a bank in temporary public ownership, must be managed in a manner that maximises the proceeds available for distribution. The bank resolution fund provides those with a residual interest in a resolved bank—either the residual bank in the case of a property transfer, or former shareholders in the case of a share transfer—with a contingent economic interest in the proceeds of resolution. It is surely right that, in some circumstances, a management duty should be placed on either the Bank of England or the Treasury to maximise any proceeds in such a fund. The noble Baroness is right to say that, in the absence of this requirement, the draconian consequences of other measure in the Bill would have to be revisited. It is designed to ensure that the interests of the previous owners of the business or assets are not treated in a capricious or dismissive manner. I stress that any management duty is subordinate to the SRR objectives and compliance with the code of practice. I also point out that the proceeds in a bank resolution fund may be calculated net of any public funds or other forms of financial assistance, including the costs of the resolution, as I explained when addressing the previous amendment. This measure was inserted specifically to protect public funds. After my explanation of the purpose of this subsection, and because there is a lot of common ground between the position of the noble Baroness and the one that I have explained, I hope that the noble Baroness will withdraw her amendment.