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Banking Bill

My Lords, I thank the Minister for setting out extensively the Government’s case against the amendment. There are two reasons why I am troubled by what the Minister said. First, he introduced the issue of moral hazard and said that the authorities will want to act while there is still franchise value. That is getting very close to saying that creditors do not have to worry about their relationship with a bank because the Government are keeping an eye on it for them. The Government are running a real risk. At present, depositors in banks have been protected beyond the Financial Services Compensation Scheme level and I assume that the Government wish to exit from that commitment at some stage. But the way in which the Minister has articulated the authorities’ relationship towards banks that may fail might encourage depositors to gain comfort that the Government, the Bank and the FSA are looking after the interests of creditors. That is undesirable. The second problem is that the Minister referred to a private sector purchaser not wanting to acquire through normal commercial means. I am concerned that the Government will become an actor in a transaction where a private sector purchaser is waiting in the wings ready for the Government to facilitate a sale on non-arm’s-length terms which could not have been obtained in the market. Those two matters leave me genuinely concerned about the consequences of what the Government are saying. I shall not pursue this issue further; we have debated it and, ultimately, we will find out whether or not this is an issue from the next round of bank failures only if, God forbid, we go into one in the future. I have more than simply semantic concerns that the way in which the Government articulate their approach to the special resolution regime may well come home to haunt either the current Government or some future Government. I beg leave to withdraw the amendment. Amendment 13 withdrawn.