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Banking Bill

The amendments are tabled in relationship to pensions because the pensions issue raises the matter in an obviously precise form—namely, that pension holders in the individual bank may be part of the scheme that obtains across the group, which was the burden of our discussion earlier. The noble Baroness asked why other directors are dragged into the provisions. The issue is authority in relation to a failing bank. We need to be able to ensure that the management of all deposit-takers can be changed if necessary to achieve the special resolution regime objectives. I share the view of the noble Baroness that the crucial objective is protecting financial stability and depositors. The powers are necessary to ensure thorough examination of management so that the management necessary to operate within the framework of the special resolution regime is present. I emphasise again that our problem with using just the word ““bank”” is that a very large number of deposit-takers in the United Kingdom—I apologise to the noble Baroness; I cannot put a precise figure on it, but she will know that it is not one that I would obviously have in my head—are part of complex group undertakings. We are consulting on the additional powers necessary to deal with these groups if they should get into severe difficulties. A Banking Bill that dealt just with banks and not with holding companies in circumstances where the financial difficulties may go beyond the single deposit-taker would indicate that the legislation could not meet its objectives of bringing security to the financial situation, so it is important to ensure that the resolution tools work for all banks. As financial markets and firms continue to develop, and consolidation within the industry continues to occur, it is important to ensure that the authorities have the appropriate powers available. Transferring the whole of a group, if the Treasury considers that transferring the deposit-taker alone would not adequately resolve the threats to financial stability, is likely to be the effective way in which to take control of the deposit-taker to stabilise it when there is a threat to financial stability. It will be recognised that just dealing with the deposit-taker itself in certain circumstances may not be sufficient. We have to ensure that the deposit-taker will be fully operational after the transfer; otherwise, there is no point in having put it into the regime. Secondly, it helps to address the problem that, if a deposit-taker is transferred out of a group, the group may fail. This could be a significant risk to financial stability itself, so the authorities have no option but to consider the wider picture. Of course, we recognise that this has the potential to be invasive, so any decision to extend the resolution tools to group companies needs to be accompanied by the appropriate safeguards. That is the basis of some of the past discussions that we have had on the Bill and, undoubtedly, of further discussions that we will have as we progress.