HM Treasury

Consultations & legislation

Banking (Special Provisions) Act 2008 and associated orders

24 June 2009

The Act and Orders are available from the OPSI website. Direct links are provided below.

The Banking (Special Provisions) Act

The Banking (Special Provisions) Act received Royal Assent on 21st February 2008.

Powers under this Act have been used in two cases, Northern Rock plc and Bradford & Bingley plc.

Northern Rock plc

The Treasury announced on 22nd February 2008 that it had acquired all the shares in Northern Rock, including its preference shares, and that all share options and other entitlements to shares issued by the company had been extinguished by a Transfer Order made under the Banking (Special Provisions) Act 2008. The Transfer Order came into force, and the transfers under it were made at, 00:01 on 22 February 2008.

The Banking (Special Provisions) Act 2008 provides for an Order to set up a compensation scheme under which an independent valuer will assess any compensation which may be payable to holders of shares transferred to the Treasury and certain other affected parties. The Order came into force on 13th March 2008.

Andrew Caldwell has been appointed by the Treasury, following the recommendation of an independent appointment panel, as independent valuer for the Northern Rock Compensation Scheme. Mr Caldwell is assessing any compensation that may be payable to the former holders of shares in Northern Rock plc which were transferred to the Treasury on 22nd February 2008.

The brief for applicants and Mr Caldwell's appointment terms can be found in the following documents:

A list of people who held shares immediately prior to the transfer is being maintained. They can update their contact details by following the instructions on the company web site. Further information for those who held Northern Rock shares prior to their transfer into public ownership is available from Mr Caldwell, who can be reached at northern.rock@bdo.co.uk

On 26 March 2009 an Order, which amends the Northern Rock plc Compensation Scheme Order 2008, came into force. The Order confers a power on the valuer to apply to the court for an order compelling a person to supply to the valuer information reasonably required for the purposes of assessing the amount compensation, if any, payable by the Treasury. The Order also makes provision for the treatment of information obtained by the valuer during the course of the valuation exercise.

Bradford & Bingley plc

On 29th September 2008 the Treasury transferred into temporary public ownership the shares in Bradford & Bingley plc ("the first transfer") and transferred Bradford & Bingley's UK and Isle of Man retail deposit book business and branch network to Abbey National plc ("the second transfer").  These transfers were effected by way of an order made under the Banking (Special Provisions) Act 2008.  

On 19 February 2009 the Treasury made an Amendment to the the Bradford & Bingley plc Transfer of Securities and Property etc. Order 2008 made last September. The Amendment Order makes further provision as to the circumstances in which the principal and interest in respect of dated subordinated notes issued by Bradford & Bingley will become due and payable. The amendment also makes provision for the position of holders of dated subordinated debt in the event of a winding-up of, or on a distribution by an administrator appointed in respect of, Bradford & Bingley.

Section 5 of the Banking (Special Provisions) Act 2008 provides that the Treasury must make an order making provision for a  compensation scheme where it has effected a transfer under section 3 of that Act (transfer of securities). The Order came into force on 19th December 2008 and specifies that an independent valuer must be appointed to determine any compensation that is payable to the former shareholders of Bradford & Bingley and other specified persons.

On 26 March 2009 an Order came into force, which amends the Bradford & Bingley plc Compensation Scheme Order 2008. The Order makes provision enabling the valuer appointed for the purposes of the Compensation Scheme to apply to the court for an order compelling a person to supply to the valuer information reasonably required for the purposes of assessing the amount of any compensation payable by the Treasury. The Order also makes provision for the treatment of information obtained by the valuer during the course of the valuation exercise and makes a further amendment to the Order in consequence of provisions of the Bradford & Bingley plc Transfer of Securities and Property etc (Amendment) Order 2009.

On 24 June 2009 Peter Clokey was appointed by the Treasury, following the recommendation of an independent appointment panel, as independent valuer for the Bradford & Bingley plc Compensation Scheme.

The brief for applicants and Mr Clokey's appointment terms can be found in the following documents:

A list of people who held shares immediately prior to the transfer is being maintained. They can update their contact details by following the instructions on the company web site. Further information for those affected by the transfer of Bradford & Bingley shares into public ownership is available from Mr Clokey, who can be reached at http://www.bandbvaluer.org.uk/

Related links

The documents are available in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page.

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