Banking_(Special_Provisions)_Act_2008

Banking (Special Provisions) Act 2008

Banking (Special Provisions) Act 2008

United Kingdom legislation

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.

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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 might 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under the Act for a maximum of a year after its passage.[7] The Act therefore expired on 21 February 2009, when it was superseded by the Banking Act 2009.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

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See also

References

  1. [1]
    The citation of this Act by this short title is authorised by section 17(1) of this Act.
  2. [2]
    The Banking (Special Provisions) Act 2008, section 17(3)
  3. [3]
    The Banking (Special Provisions) Act 2008, section 17(2)
  4. [4]
    Alistair Darling accused of Northern Rock Freedom of Information cover-up The Daily Telegraph 20 February 2008. Retrieved: 21 February 2008.
  5. [5]
    Webster, Philip; Hosking, Patrick; Reid, Tim (29 September 2008). "Taxpayers must risk billions for Bradford & Bingley". The Times. London: Times Newspapers Ltd. Retrieved 9 October 2008.
  6. [6]
    "Moves to protect UK customers as bank shuts". The Independent. Independent News & Media. 8 October 2008. Archived from the original on 11 December 2008. Retrieved 9 October 2008.
  7. [7]
    The Banking (Special Provisions) Act 2008, section 2
  8. [8]
    The Northern Rock plc Transfer Order 2008 (SI 2008/432). Made on 21 February 2008.
  9. [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. [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. [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. [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.
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