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BBA Comment Regarding H M Treasury Consultation

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  • BBA Comment Regarding H M Treasury Consultation

    The British Bankers' Association supports the need for the public to be confident that if their bank gets into difficulties their savings are safe and they can get access to their money quickly.

    But to focus on a specific amount of depositor protection is to miss the most important point: it is better not to need it at all. We have been talking with the Government and regulators about intervening earlier should a bank get into difficulties to prevent a banking problem becoming a crisis.
    The UK has a strong and robust banking system and a depositor protection scheme which already protects fully some 96 per cent of depositors. We will continue to work with the Government to ensure the safeguards to the UK's financial stability remain strong, effective and readily understood by the saving public.


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    Last edited by Amethyst; 1st July 2008, 15:21:PM.

  • #2
    mmm read a speach on this from the FSA yesterday...see if I can find it.

    ah ha - Competition in Banking: The Role of Orderly Entry and Orderly Exit

    Speech by Thomas Huertas, Director, Banking Sector, FSA
    Chatham House Conference, London
    20 June 2008

    As a result of this experience, the Tripartite authorities resolved to introduce legislation to improve their ability to handle failing banks – to allow for exit of unsuccessful banks from the marketplace whilst limiting collateral damage to depositors, to the public finances and to the economy at large. This involves two principal measures:
    • Introducing a special resolution regime for failing banks
    • Strengthening the ability of the deposit guarantee system to pay out covered deposits promptly.
    The choice of resolution tools will be up to the Bank of England, subject to consultation with the Treasury and the FSA, and subject to the approval of the Chancellor of the Exchequer if the tool involves the sue of public funds. The range of tools includes
    • a transfer of part or all of the failing bank to a private sector third party;
    • a transfer of part or all of the failing bank to a publicly-controlled bridge bank;
    • the power to take a bank into temporary public sector ownership; and
    • a new bank insolvency procedure. This would involve the payout of covered deposits to eligible depositors within a very short time frame, and for this purpose the legislation will also propose a number of measures to strengthen the ability of the FSCS to do so.

    see also Darling to increase bank deposit protection - Legal Beagles
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