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Banking Bill

My Lords, Amendment 5 gives recognition to the interests of creditors and shareholders. This is a more modest amendment than those discussed in Committee. At that time, the Minister pointed out that objective 5 set out in Clause 4(8), referring to the Human Rights Act, gave adequate protection so an amendment to include the protection of creditors was not necessary. Up to a point, as the Minister said, the special resolution regime is designed for the protection of depositors, and the protection of creditors is not a primary objective. That being the case, there is a danger that creditors, especially small creditors, may end up being accidental casualties, as the authorities pursue the primary objective of this legislation. Similarly, shareholders may also suffer disadvantages, in particular, with the power included in the legislation for the Government to acquire holdings and/or other group companies of a bank. In this case, the line between what is a failing bank and other interests of that corporation or group may not be clearly defined. I do not agree with the Minister’s arguments in favour of this power, but if it is included in the Bill, there is a danger that, as with creditors, as was pointed out earlier, the interests of shareholders could become overlooked or trampled on in pursuing the primary objective of protecting depositors. If the powers included in the Bill become law, it would be only reasonable that there should be recognition that creditors and shareholders also have rights. Those rights will not disappear just because a bank is in trouble, even if creditors and shareholders have to take their turn behind depositors. As commented on earlier, this amendment is modest and would in no way impede the protection of depositors and the banking system. However, it would help to draw attention to the fact that there are other interests as well as those of depositors. I beg to move.