Act of Parliament | |
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. |
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Citation | 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Text of statute as originally enacted | |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 might be in financial difficulty. [4]
Following 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 [7] The Act therefore expired on 21 February 2009, when it was superseded by the Banking Act 2009.
Bank | Action taken | Date | Refs |
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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] |
The ING Group is a Dutch multinational banking and financial services corporation headquartered in Amsterdam. Its primary businesses are retail banking, direct banking, commercial banking, investment banking, wholesale banking, private banking, asset management, and insurance services. With total assets of US$967.8 billion, it is one of the biggest banks in the world, and consistently ranks among the largest banks globally.
Northern Rock, formerly the Northern Rock Building Society, was a British bank. Based at Regent Centre in Newcastle upon Tyne, United Kingdom, Northern Rock was originally a building society. It demutualised and became Northern Rock bank in 1997, when it floated on the London Stock Exchange with the ticker symbol NRK.
Alliance & Leicester plc was a British bank and former building society, formed by the merger in 1985 of the Alliance Building Society and the Leicester Building Society. The business demutualised in the middle of 1997, when it was floated on the London Stock Exchange. It was listed in the FTSE 250 Index, and had been listed in the FTSE 100 Index from April 1997 until June 2008.
Kaupthing Bank was a major international Icelandic bank, headquartered in Reykjavík, Iceland. It was taken over by the Icelandic government during the 2008–2011 Icelandic financial crisis and the domestic Icelandic-based operations were spun into a new bank New Kaupthing, which was subsequently renamed Arion Banki. All the non-Icelandic assets and debts remained with the now defunct Kaupthing Bank. Prior to its collapse, it also allegedly loaned money to various parties with the purpose of buying Kaupthing shares.
Bradford & Bingley plc was a British bank with headquarters in the West Yorkshire town of Bingley.
The Shareholder Executive (ShEx) was a body within the UK Government between 2003 and 2016, responsible for managing the government's financial interest in a range of state-owned businesses for commercial rather than political interests. It was part of the Department for Business, Innovation and Skills and staffed by civil servants, many of whom were corporate finance professionals with private sector experience. It was led by Mark Russell as chief executive at the time of its merger into UK Government Investments.
Kaupthing Singer & Friedlander was 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 individuals. Primary areas of activity were treasury, investment management, capital markets services, asset finance, and private banking. The company was created in August 2006 by the merger of Singer & Friedlander Plc and Icelandic Kaupthing Bank. The UK government put the company into administration in October 2008 in response to the failure of its parent as a result of the financial crisis of 2007–08.
The HBOS Group Reorganisation Act 2006 is a local act of Parliament, passed by the Parliament of the United Kingdom in June 2006. The aim of the act was to provide HBOS plc, a banking and insurance group in the UK, the legal authority to reorganise its subsidiaries into a simplified structure. It came into effect on 17 September 2007.
Bradford & Bingley International (BBI) was the international banking subsidiary of Bradford & Bingley, which was itself acquired by the Santander Group in 2008.
The government interventions during the subprime mortgage crisis were a response to the 2007–2009 subprime mortgage crisis and resulted in a variety of government bailouts that were implemented to stabilize the financial system during late 2007 and early 2008.
In the period September 2007 to December 2009, during the Global Financial Crisis, the UK government intervened financially to support the UK banking sector, and four UK banks in particular.
The Icelandic financial crisis was a major economic and political event in Iceland between 2008 and 2010. It involved the default of all three of the country's major privately owned commercial banks in late 2008, following problems in refinancing their short-term debt and a run on deposits in the Netherlands and the United Kingdom. Relative to the size of its economy, Iceland's systemic banking collapse was the largest of any country in economic history. The crisis led to a severe recession and the 2009 Icelandic financial crisis protests.
In 2008 the Northern Rock bank was nationalised by the British government, due to financial problems caused by the subprime mortgage crisis. In 2010 the bank was split into two parts to aid the eventual sale of the bank back to the private sector.
UK Financial Investments (UKFI) was a limited company set up in November 2008 and mandated by the British government to manage HM Treasury's shareholdings in the Royal Bank of Scotland Group (RBS) and in UK Asset Resolution, which held the residual assets of NRAM plc and Bradford & Bingley. UKFI formerly managed the British government's shares in Lloyds Banking Group, until the government confirmed that all its shares had been sold on 17 May 2017. It also previously owned Northern Rock, until that company was taken over by Virgin Money on 1 January 2012. UKFI ceased trading on 31 March 2018, and its business and assets were transferred to UK Government Investments, a limited company wholly owned by HM Treasury.
Santander UK plc is a British bank, wholly owned by Banco Santander, a Spanish bank. Santander UK plc manages its affairs autonomously, with its own local management team, responsible solely for its performance.
Landmark Mortgages Limited, formerly Northern Rock plc and later NRAM plc, is a British asset holding and management company which was split away from the Northern Rock bank in 2010. It was publicly owned through the British Government's UK Asset Resolution following Northern Rock's nationalisation in 2008 until NRAM plc was sold to Cerberus Capital Management in 2016. The company is closed to new business.
UK Asset Resolution (UKAR) is a British financial services holding company with headquarters in the West Yorkshire village of Crossflatts. It was established in October 2010 as a bad bank to hold the two run-off elements, Bradford & Bingley and NRAM plc, of the two nationalised banks in the wake of the financial crisis of 2007 and 2008.
Richard Lee Banks is a British banker who is Chief Executive of UK Asset Resolution, the state-owned "bad bank" that was formed from Northern Rock and Bradford & Bingley, when those banks failed in 2008. In 2014, an opinion piece in the Evening Standard asked if he was "Britain's best banker", as he had successfully reduced the assets of UK Asset Resolution by 40 percent and repaid £4bn to the British government.