Banking (Special Provisions) Act 2008
Encyclopedia
The Banking 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.
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.
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. 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. The Act therefore expired on 21 February 2009, when it was superseded by the Banking Act 2009
.
Acts of Parliament in the United Kingdom
An Act of Parliament in the United Kingdom is a type of legislation called primary legislation. These Acts are passed by the Parliament of the United Kingdom at Westminster, or by the Scottish Parliament at Edinburgh....
of the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
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
Northern Rock
Northern Rock plc is a British bank, best known for becoming the first bank in 150 years to suffer a bank run after having had to approach the Bank of England for a loan facility, to replace money market funding, during the credit crisis in 2007. Having failed to find a commercial buyer for...
after the bank was supported by Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
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
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
was based on: the Bill providing an exemption to the Freedom of Information Act 2000
Freedom of Information Act 2000
The Freedom of Information Act 2000 is an Act of Parliament of the Parliament of the United Kingdom that creates a public "right of access" to information held by public authorities. It is the implementation of freedom of information legislation in the United Kingdom on a national level...
, 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.
After the nationalisation of Northern Rock
Nationalisation of Northern Rock
In 2008 the Northern Rock bank was nationalised by the British Government, due to financial problems caused by the subprime mortgage crisis...
, the Act allowed for the nationalisation of the mortgage and personal loan book of Bradford & Bingley
Bradford & Bingley
Bradford & Bingley plc is a British bank with headquarters in the West Yorkshire town of Bingley. In 2008, partly due to the credit crunch, the bank was nationalised and in effect split into two parts; the mortgage book remained with the now publicly owned Bradford & Bingley plc, and the deposits...
on 29 September 2008.
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
Landsbanki
Landsbanki, also commonly known as Landsbankinn in Iceland, is a private Icelandic bank with international operations...
, and Kaupthing Edge to ING Direct. 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. The Act therefore expired on 21 February 2009, when it was superseded by the Banking Act 2009
Banking Act 2009
The Banking Act 2009 is an Act of the Parliament of the United Kingdom that entered into force in part on the 21 February 2009 in order, amongst other things, to replace the Banking Act 2008...
.
List of banks acquired/transferred under the Act
| Bank | Action taken | Date | Refs |
|---|---|---|---|
| Northern Rock Northern Rock Northern Rock plc is a British bank, best known for becoming the first bank in 150 years to suffer a bank run after having had to approach the Bank of England for a loan facility, to replace money market funding, during the credit crisis in 2007. Having failed to find a commercial buyer for... |
Nationalised Nationalisation of Northern Rock In 2008 the Northern Rock bank was nationalised by the British Government, due to financial problems caused by the subprime mortgage crisis... |
21 February 2008 | |
| Bradford & Bingley Bradford & Bingley Bradford & Bingley plc is a British bank with headquarters in the West Yorkshire town of Bingley. In 2008, partly due to the credit crunch, the bank was nationalised and in effect split into two parts; the mortgage book remained with the now publicly owned Bradford & Bingley plc, and the deposits... |
Mortgage assets nationalised; savings deposits and branch network transferred to Abbey Abbey (bank) Abbey National plc was a UK-based bank and former building society, which latterly traded under the Abbey brand name. It became a wholly owned subsidiary of Grupo Santander of Spain in 2004, and was rebranded as Santander in January 2010, forming Santander UK along with the savings business of the... , a UK subsidiary of Grupo Santander Grupo Santander The Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world... |
29 September 2008 | |
| Heritable Bank (subsidiary of Landsbanki Landsbanki Landsbanki, also commonly known as Landsbankinn in Iceland, is a private Icelandic bank with international operations... of Iceland) |
Transferred to ING Direct | 7 October 2008 | |
| Kaupthing Edge (division of Kaupthing Singer & Friedlander Kaupthing Singer & Friedlander Kaupthing Singer & Friedlander is a financial services provider offering corporate and investment banking services to small and medium-sized companies, as well as wealth management services for high net worth clients. Primary areas of activity are treasury, investment management, capital markets... ) |
Transferred to ING Direct | 8 October 2008 |
External links
- The Banking (Special Provisions) Act 2008, as amended from the National Archives.
- The Banking (Special Provisions) Act 2008, as originally enacted from the National Archives.
- Explanatory notes to the Banking (Special Provisions) Act 2008.
- History of the passage of the bill through parliament