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Banking Bill

The Minister will not expect these Benches to greet any amendment which increases the scope of nationalisation even if it is accompanied by that well known word ““temporary””, which has no defined meaning in the Bill. I am not sure that the Government have made a clear case for this. Is the Minister saying that these provisions are only required for pension schemes in order to ensure that they can be properly dealt with? I gathered from the tail-end of the Minister’s remarks that that is what he was saying. Apart from that, he said that bank structures are often complicated—which I am sure they are—but he did not explain why the continuity obligation clauses, which we debated partially earlier, could not deal with the issues that he raised. I am not clear what it is that has led the Government to seek this additional nationalisation power unless it is only for pensions. I found the way in which the Minister introduced it difficult to follow. Perhaps he will cover that point in his reply. Can he say also how many UK banks are likely to have holding companies which could get dragged into nationalisation? Is it a large number of banks? I am sure the Treasury has been passing its nationalisation slide-rule over the whole of the banking sector so there must be an easy answer. The Minister’s colleague next to him looks as if he is well aware of the answer so I am sure there is one. How many banks could have their holding companies dragged in in this way? Amendment 126 proposes a new clause on holding companies and its subsection (4) restricts its use to holding companies which are incorporated in the UK. In practical terms, that is probably all that the Government can do, but have they considered the extent to which that may now make the UK an unattractive place for a bank to have its holding company? If that were the case, it would add to a number of other features that have accumulated over recent years of why the UK is not a good home for the holding companies of organisations. In particular, have the Government considered whether this might drive bank holding companies out of the UK? It could leave the UK bank operating in the UK but its holding company could go somewhere else. I remind the Minister of HSBC. It is currently headquartered and based in the UK. Its name is the Hong Kong and Shanghai Banking Corporation, and it was domiciled in Hong Kong. When the Chinese looked as if they were going to take over Hong Kong, it activated provisions in its articles of association and moved to New York. I am not suggesting that HSBC would look at the Bill and think about moving, although it might, but it illustrates the point that banks that operate on a global scale and their holding companies do not have real roots in territories. They can just up and move to another territory. If this clause is on the statute book, will it not encourage holding companies to move outside the UK, which is not to the advantage of the UK? A more detailed point relates to Amendment 127. It brings in which of the powers in the earlier part of the Bill can be used in the context of the holding company. Clause 20, which we debated earlier, relates to rewriting the employment rights of directors. This amendment allows the rewriting of the employment rights of directors of the holding company and of the bank. I understand those two within the Government’s rationale for Clause 20, but I cannot understand why that clause should also apply to the directors of a bank in the same group. I do not think there is any suggestion here that the bank in the same group is a failing or failed bank, so why are the Government taking powers to reach into another bank, not the failed bank, in the way set out in Clause 20? Having looked at this ability to take the holding company into public ownership, I went back and looked at the earlier part of the Bill to see if it dealt adequately with everything that might come up in the context of a holding company. I shall put to the Minister some things that might not be adequately dealt with in the early part of the Bill. We are now potentially taking into temporary public ownership businesses that are nothing to do with a failed bank and are potentially viable, vibrant, saleable or whatever. There just happens to be a failed bank. On the first day in Committee, we debated the objectives of the special resolution regime that this holding company is being brought into, and the Government rejected the amendment moved by the noble Lord, Lord Newby, in relation to enterprise value and our amendments in relation to creditors. If the Government are going to go beyond taking into public ownership failed banks and grab all kinds of other activities, they ought to revisit whether the terms in which the objectives are stated in Clause 4 are robust. If the Government do not do so, we need to before Report. The second area that the Government ought to revisit is the code of practice issued under Clause 5. The draft code does not include anything because it was issued before the Government came up with the wizard idea of grabbing holding companies and fellow subsidiaries while taking hold of a bank. That ought to be covered in the code of practice, and I was unclear whether the way in which the code of practice was drafted in terms of taking a holding company into temporary public ownership would require the Government to cover that. It seems to me that it should. I leave those points with the Minister, but I hope he will reply to the questions I asked earlier.