Banking (Special Provisions) Act 2008

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The Banking (Special Provisions) Act 2008[1]
Long title An Act to make provision to enable the Treasury in certain circumstances to make an order relating to the transfer of securities issued by, or of property, rights or liabilities belonging to, an authorised deposit-taker; to make further provision in relation to building societies; and for connected purposes.
Chapter 2008 c 2
Introduced by Alistair Darling (Chancellor of the Exchequer)
Territorial extent England and Wales, Scotland and Northern Ireland[2]
Dates
Royal Assent 21 February 2008
Commencement 21 February 2008[3]
Status: Current legislation
History of passage through Parliament
Text of statute as originally enacted
Revised text of statute as amended

The Banking (Special Provisions) Act 2008 (c 2) is an Act of the Parliament of the United Kingdom that entered into force on the 21 February 2008 in order to enable the UK government to nationalise high-street banks under emergency circumstances by secondary legislation. The Act was introduced in order to nationalise the failing bank Northern Rock after the bank was supported by Bank of England credit and a private-sector solution was deemed "not to provide sufficient value for the taxpayer" by the UK government.

Opposition to the Act by the Conservatives was based on: the Bill providing an exemption to the Freedom of Information Act 2000, the large liabilities to the taxpayer and the alleged lack of independence from the government. The Bill was also sufficiently widely drawn to allow the nationalisation of any financial institution, leading to the concern that other banks may be in financial difficulty.[4]

After the nationalisation of Northern Rock, the Act allowed for the nationalisation of the mortgage and personal loan book of Bradford & Bingley on 29 September 2008.[5]

On 8 October 2008, the Treasury announced that an order under the Act was being used to transfer all retail deposits with Heritable Bank, a UK-based banking subsidiary of the failing Icelandic bank Landsbanki, and Kaupthing Edge to ING Direct.[6] However section 2(8) of the Act provides that the Treasury may only make Transfer Orders under the Act for a maximum of a year after its passage.[7] The Act therefore expired on 21 February 2009, when it was superseded by the Banking Act 2009.

List of banks acquired/transferred under the Act[edit]

Bank Action taken Date Refs
Northern Rock Nationalised 21 February 2008 [8]
Bradford & Bingley Mortgage assets nationalised; savings deposits and branch network transferred to Abbey, a UK subsidiary of Grupo Santander 29 September 2008 [5][9]
Heritable Bank (subsidiary of Landsbanki of Iceland) Transferred to ING Direct 7 October 2008 [6][10][11]
Kaupthing Edge (division of Kaupthing Singer & Friedlander) Transferred to ING Direct 8 October 2008 [6][12]

References[edit]

  1. ^ The citation of this Act by this short title is authorised by section 17(1) of this Act.
  2. ^ The Banking (Special Provisions) Act 2008, section 17(3)
  3. ^ The Banking (Special Provisions) Act 2008, section 17(2)
  4. ^ Alistair Darling accused of Northern Rock Freedom of Information cover-up The Daily Telegraph 20 February 2008. Retrieved: 21 February 2008.
  5. ^ a b Webster, Philip; Hosking, Patrick; Reid, Tim (29 September 2008). "Taxpayers must risk billions for Bradford & Bingley". The Times (London: Times Newspapers Ltd). Retrieved 2008-10-09. 
  6. ^ a b c "Moves to protect UK customers as bank shuts". The Independent (Independent News & Media). 8 October 2008. Retrieved 2008-10-09. 
  7. ^ The Banking (Special Provisions) Act 2008, section 2
  8. ^ The Northern Rock plc Transfer Order 2008 (SI 2008/432). Made on 21 February 2008.
  9. ^ The Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 (SI 2008/2546). Made at 7.40 a.m. on 29 September 2008.
  10. ^ The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (SI 2008/2644). Made at 9.27 a.m. on 7 October 2008.
  11. ^ The Transfer of Rights and Liabilities to ING Order 2008 (SI 2008/2666). Made at 10.00 a.m. on 8 October 2008.
  12. ^ The Kaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order 2008 (SI 2008/2674). Made at 12.05 p.m. on 8 October 2008.

External links[edit]