Banking Act 1987 (repealed)

• (c) is a former authorised institution (not being a recognised bank or licensed institution excluded by an order under section 23(2) of the Banking Act 1979);

and if at any time such an institution ceases to be insolvent, subsection (1) above shall cease to apply in relation to that institution.

• (2A) In subsection (1) above ’the relevant period’ means—

• (a) the period of three months beginning with the time when the institution becomes insolvent; or

• (b) that period and such additional period or periods, being not more than three and of not more than three months each, as the Authority may in exceptional circumstances allow.

• (2B) A person claiming to be entitled to a payment under subsection (1) above in respect of a protected deposit with a participating institution shall make his claim in such form, with such evidence proving it, and within such period, as the Board directs.

• (2C) The amount of any payment which falls to be made under subsection (1) above in respect of a protected deposit made with an office of a UK institution in another EEA State shall not exceed such amount as the Board may determine is or would be payable, in respect of an equivalent deposit made with an institution authorised in that State, under any corresponding scheme for the protection of depositors or investors which is in force in that State.

• (2D) Where, in the case of a participating EEA institution, the Board is satisfied that a depositor has received or is entitled to receive a payment in respect of his protected deposit under any home State scheme, the Board shall deduct an amount equal to that payment from the payment that would otherwise be made to the depositor under subsection (1) above.

• (3) Where, in the case of a UK institution or participating non-EEA institution, the Board is satisfied that a depositor has received or will receive a payment in respect of his protected deposit under any scheme for protecting depositors or investors which is comparable to that for which provision is made by this Part of this Act or under a guarantee given by a government or other authority the Board may—

• (a) deduct an amount equal to the whole or part of that payment from the payment that would otherwise be made to him under subsection (1) . . . above; or

• (b) in pursuance of an agreement made by the Board with the authority responsible for the scheme or by which the guarantee was given, make in full the payment required by that subsection and recoup from that authority such contribution to it as may be specified in or determined under the agreement.

• (4) Where the Board makes such a deduction as is mentioned in paragraph (a) of subsection (3) above it may agree with the authority responsible for the scheme or by which the guarantee was given to reimburse that authority to the extent of the deduction or any lesser amount.

• (5) The Board may decline to make any payment under subsection (1) to a person who, in the opinion of the Board—

• (a) has any responsibility for, or may have profited directly or indirectly from, the circumstances giving rise to the institution’s financial difficulties; or

• (b) has received or is entitled to receive a payment in respect of his protected deposit under a scheme established under section 54 of the Financial Services Act 1986 or set up pursuant to the conditions and arrangements referred to in section 43(2) of that Act,

and where any payment as mentioned in paragraph (b) above has been received by a person, the Board shall decline to make a payment under subsection (1) to that person.

• (6) There shall be deducted from any payment to be made by the Board under subsection (1) above in respect of a deposit any payment already made in respect of that deposit by a liquidator or administrator of the institution; and in this subsection, in relation to an institution formed under the law of a country or territory outside the United Kingdom, the reference to a liquidator or administrator includes a reference to a person whose functions appear to the Board to correspond as nearly as may be to those of a liquidator or administrator.

• (7) The Treasury may, after consultation with the Board, by order amend subsection (1) above so as to substitute for the fraction for the time being specified in that subsection such other fraction as may be specified in the order; but no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

• (8) Notwithstanding that the Board may not yet have made or become liable to make a payment under subsection (1) above in relation to an institution falling within that subsection—

• (a) the Board shall at all times be entitled to receive any notice or other document required to be sent to a creditor of the institution under Part II of the Insolvency Act 1986 or under Part III of the Insolvency (Northern Ireland) Order 1989, or required to be sent to a creditor of the institution whose debt has been proved; and

• (b) a duly authorised representative of the Board shall be entitled—

• (i) to attend any meeting of creditors of the institution and to make representations as to any matter for decision at that meeting;

• (ii) to be a member of any committee established under section 26 or 301 of the Insolvency Act 1986;

• (iii) to be a commissioner under section 30 of the Bankruptcy (Scotland) Act 1985; and

• (iv) to be a member of a committee established for the purposes of Part IV or V of the Insolvency Act 1986 under section 101 of that Act or under section 141 or 142 of that Act . . ..

• (v) to be a member of any committee established under Article 38 or 274 of the Insolvency (Northern Ireland) Order 1989; and

• (vi) to be a member of a committee established for the purposes of Part V or VI of the Insolvency (Northern Ireland) Order 1989 under Article 87 of that Order or under Article 120 of that Order.

• (9) Where a representative of the Board exercises his right to be a member of such a committee as is mentioned in paragraph (b)(ii) or (iv) of subsection (8) above or to be a commissioner by virtue of paragraph (b)(iii) of that subsection he may not be removed except with the consent of the Board and his appointment under that subsection shall be disregarded for the purposes of any provision made by or under any enactment which specifies a minimum or maximum number of members of such a committee or commission.

• (10) References in this section and sections 59 and 60 below to a former authorised institution include references to an institution which—

• (a) was formerly a European authorised institution which accepted deposits in the United Kingdom; and

• (b) continues to have a liability in respect of any deposit for which it had a liability when it was such an institution;

and references in section 60 below to ceasing to be an authorised institution include references to ceasing to be a European authorised institution which accepted deposits in the United Kingdom.

Meaning of insolvency

59

• (1) For the purposes of this Part of this Act, a UK institution or participating non-EEA institution becomes insolvent—

• (a) on the making by the Authority of a determination that, for reasons which directly relate to the institution’s financial circumstances, the institution—

• (i) is unable to repay deposits which are due and payable; and

• (ii) has no current prospect of being able to do so;

• (b) on the making by a court in any part of the United Kingdom, or in another EEA State, or a judicial ruling which—

• (i) directly relates to the institution’s financial circumstances; and

• (ii) has the effect of suspending the ability of depositors to make claims against the institution; or

• (c) in the case of a participating non-EEA institution, on the making by a court in any country or territory outside the European Economic Area of a judicial ruling which appears to the Board to correspond as nearly as may be to such a judicial ruling as is mentioned in paragraph (b) above,

but only if deposits made with the institution have become due and payable and have not been repaid.

• (2) For those purposes, a participating EEA institution becomes insolvent—

• (a) on the making by the supervisory authority in the institution’s home State of a declaration that deposits held by the institution are no longer available; or

• (b) on the making by a court in any part of the United Kingdom, or in an EEA State other than the institution’s home State, of a judicial ruling which—

• (i) directly relates to the institution’s financial circumstances; and

• (ii) has the effect of suspending the ability of depositors to make claims against the institution,

but only if, in a case falling within paragraph (b) above, deposits made with the institution have become due and payable and have not been repaid.

• (3) For those purposes—

• (a) an institution which has become insolvent by virtue of such a determination or declaration as is mentioned in subsection (1)(a) or (2)(a) above ceases to be insolvent on any withdrawal of the determination or declaration; and

• (b) an institution which has become insolvent by virtue of such a judicial ruling as is mentioned in subsection (1)(b) or (c) or (2)(b) above ceases to be insolvent on any reversal of the ruling (whether on appeal or otherwise).

• (4) In relation to a UK institution or participating non-EEA institution, it shall be the duty of the Authority—

• (a) to make such a determination as is mentioned in subsection (1)(a) above within 21 days of its being satisfied as there mentioned; and

• (b) to withdraw such a determination within 21 days of its ceasing to be so satisfied.

• (5) In this section—

• (a) any reference to a UK institution includes references to a former UK institution, and to a former authorised institution which is incorporated in or formed under the law of any part of the United Kingdom;

• (b) any reference to a participating EEA institution includes references to a former participating EEA institution, and to a former authorised institution which is incorporated in or formed under the law of an EEA State other than the United Kingdom; and

• (c) any reference to a participating non-EEA institution includes references to a former participating non-EEA institution, and to a former authorised institution which is incorporated in or formed under the law of a country or territory which is outside the European Economic Area.

Protected deposits

60

• (1) Subject to the provisions of this section, in relation to an institution in respect of which a payment falls to be made under section 58(1) above, any reference in this Act to a depositor’s protected deposit is a reference to the liability of the institution to him in respect of—

• (a) the principal amount of each deposit in an EEA currency which was made by him with a United Kingdom office of the institution before the time when the institution became insolvent and has become due and payable; and

• (b) accrued interest on any such deposit up to the time when it became due and payable,

but so that the total liability of the institution to him in respect of such deposits does not exceed £20,000, or the sterling equivalent of 22,222 ecus immediately before the time when the institution became insolvent, whichever is the greater.

• (2) In calculating a depositor’s protected deposit for the purposes of subsection (1) above, the amount to be taken into account as regards any deposit made in another EEA currency shall be its sterling equivalent immediately before the time when the institution became insolvent, or the time when the deposit became due and payable, whichever is the later.

• (2A) In its application to UK institutions, subsection (1) above shall have effect as if any reference to United Kingdom offices included a reference to offices in other EEA States.

• (3) For the purposes of subsection (1) above no account shall be taken of any liability unless—

• (a) proof of the debt, or a claim for repayment of the deposit, which gives rise to the liability has been lodged with a liquidator or administrator of the institution; or

• (b) the depositor has provided the Board with all such written authorities, information and documents as, in the event of a liquidator or administrator being appointed, the Board will need for the purpose of lodging and pursuing, on the depositor’s behalf, a proof of the debt, or a claim for the repayment of the deposit, which gives rise to the liability.

• (4) In subsection (3) above, in relation to an institution incorporated in or formed under the law of a country or territory outside the United Kingdom—

• (a) references to a liquidator or administrator include references to a person whose functions appear to the Board to correspond as nearly as may be to those of a liquidator or administrator; and

• (b) references to the lodging, or the lodging and pursuing, of a proof of the debt, or a claim for the repayment of the deposit, which gives rise to the liability include references to the doing of an act or acts which appear to the Board to correspond as nearly as may be to the lodging, or the lodging and pursuing, of such a proof or claim.

• (5) The Treasury may, after consultation with the Board, by order amend subsection (1) above so as to substitute for the sum for the time being specified in those subsections such larger sum as may be specified in the order; but no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

• (6) In determining the liability or total liability of an institution to a depositor for the purposes of subsection (1) above, no account shall be taken of any liability in respect of a deposit if—

• (a) it is a secured deposit; or

• (b) it is a deposit which is own funds within the meaning given by Section 1 of Chapter 2 of Title V of the Banking Consolidation Directive; or

• (c) it is a deposit which the Board is satisfied was made in the course of a money-laundering transaction; or

• (d) it is a deposit by a person mentioned in item 1 or 2 of Annex I to Directive 94/19/EC which was made otherwise than as trustee for a person not so mentioned; or

• (e) the institution is a former UK institution or former authorised institution and the deposit was made after it ceased to be a UK institution or authorised institution unless, at the time the deposit was made, the depositor did not know, and could not reasonably be expected to have known, that it had ceased to be a UK institution or authorised institution; or

• (f) the institution is a former participating EEA institution and the deposit was made after it ceased to be a participating EEA institution; or

• (g) the institution is a former participating non-EEA institution and the deposit was made after it ceased to be a participating non-EEA institution unless the Board is satisfied—

• (i) that the depositor is entitled under the institution’s home State scheme to a payment in respect of the deposit; and

• (ii) that he has not received, and has no prospect of receiving, that payment;

and references in paragraph (e) above to an institution ceasing to be an authorised institution include references an institution ceasing to be a recognised bank or licensed institution under the Banking Act 1979.

• (6A) A transaction in connection with which an offence has been committed under—

• (a) any enactment specified in regulation 2(3) of the Money Laundering Regulations 1993 ; or

• (b) any enactment in force in another EEA State, or in a country or territory outside the European Economic Area, which has effect for the purpose of prohibiting money laundering within the meaning of Article 1 of Directive 91/308/EEC ,

is a money-laundering transaction for the purposes of subsection (6)(c) above at any time if, at that time, a person stands convicted of the offence or has been charged with the offence and has not been tried.

• (7) Unless the Board otherwise directs in any particular case, in determining the total liability of an institution to a depositor for the purposes of subsection (1) . . . above there shall be deducted the amount of any liability of the depositor to the institution—

• (a) in respect of which a right of set-off existed immediately before the institution became insolvent against any such deposit in an EEA currency as is referred to in subsection (1) . . . above; or

• (b) in respect of which such right would then have existed if the deposit in question had been repayable on demand and the liability in question had fallen due.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) For the purposes of this section and sections 61 and 62 below the definition of deposit in section 5 above—

• (a) shall be treated as including—

• (i) any sum that would otherwise be excluded by paragraph (a), (d) or (e) of subsection (3) of that section if the sum is paid as trustee for a person not falling within any of those paragraphs;

• (ii) any sum that would otherwise be excluded by paragraph (b) or (c) of that subsection;

• (b) subject to subsections (10) and (11) below, shall be treated as excluding any sum paid by a trustee for a person falling within paragraph (e) of subsection (3) of that section; and

• (c) shall be treated as including any sum the right to repayment of which is evidenced by a transferable certificate of deposit or other transferable instrument and which would be a deposit within the meaning of section 5 as extended by paragraph (a) and restricted by paragraph (b) above if it had been paid by the person who is entitled to it at the time when the institution in question becomes insolvent.

• (10) Where the trustee referred to in paragraph (b) of subsection (9) above is not a bare trustee and there are two or more beneficiaries that paragraph applies only if all the beneficiaries fall within section 5(3)(e) above.

• (11) Subsection (10) above does not extend to Scotland and, in Scotland, where there are two or more beneficiaries of a trust the trustee of which is referred to in paragraph (b) of subsection (9) above that paragraph applies only if all the beneficiaries fall within section 5(3)(e) above.

Trustee deposits, joint deposits etc.

61

• (1) In the cases to which this section applies sections 58 and 60 above shall have effect with the following modifications.

• (2) Subject to the provisions of this section, where any persons are entitled to a deposit as trustees they shall be treated as a single and continuing body of persons distinct from the persons who may from time to time be the trustees, and if the same persons are entitled as trustees to different deposits under different trusts they shall be treated as a separate and distinct body with respect to each of those trusts.

• (3) Where a deposit is held for any person or for two or more persons jointly by a bare trustee, that person or, as the case may be, those persons jointly shall be treated as entitled to the deposit without the intervention of any trust.

• (4) Subsection (3) above does not extend to Scotland and, in Scotland, where a deposit is held by a person as nominee for another person or for two or more other persons jointly, that other person or, as the case may be, those other persons jointly shall be treated as entitled to the deposit.

• (5) A deposit to which two or more persons are entitled as members of a partnership (whether or not in equal shares) shall be treated as a single deposit.

• (6) Subject to subsection (5) above, where two or more persons are jointly entitled to a deposit and subsection (2) above does not apply each of them shall be treated as having a separate deposit of an amount produced by dividing the amount of the deposit to which they are jointly entitled by the number of persons who are so entitled.

• (7) Where a person is entitled (whether as trustee or otherwise) to a deposit made out of a clients’ or other similar account containing money to which one or more other persons are entitled, that other person or, as the case may be, each of those other persons shall be treated (to the exclusion of the first-mentioned person) as entitled to so much of the deposit as corresponds to the proportion of the money in the account to which he is entitled.

• (8) Where an authorised institution is entitled as trustee to a sum which would be a deposit apart from section 5(3)(a) above and represents deposits made with the institution, each of the persons who made those deposits shall be treated as having made a deposit equal to so much of that sum as represents the deposit made by him.

• (9) The Board may decline to make any payment under section 58 above in respect of a deposit until the person claiming to be entitled to it informs the Board of the capacity in which he is entitled to the deposit and provides sufficient information to enable the Board to determine what payment (if any) should be made under that section and to whom.

• (10) In this section “jointly entitled” means—

• (a) in England and Wales and in Northern Ireland, beneficially entitled as joint tenants, tenants in common or coparceners;

• (b) in Scotland, beneficially entitled as joint owners or owners in common.

• (11) In the application of this section in relation to deposits made with an office of a UK institution in another EEA State, references to persons entitled in any of the following capacities, namely—

• (a) as trustees;

• (b) as bare trustees;

• (c) as members of a partnership; or

• (d) as persons jointly entitled,

shall be construed as references to persons entitled under the law of that State in a capacity appearing to the Board to correspond as nearly as may be to that capacity.

Liability of institution in respect of compensation payments

62

• (1) This section applies where—

• (a) an institution becomes insolvent . . .; and

• (b) the Board has made, or is under a liability to make, a payment under section 58 above by virtue of the institution becoming insolvent . . .;

and in the following provisions of this section a payment falling within paragraph (b) above, less any amount which the Board is entitled to recoup by virtue of any such agreement as is mentioned in subsection (3)(b) of that section, is referred to as “a compensation payment” and the person to whom such a payment has been or is to be made is referred to as “the depositor”.

• (2) Where this section applies in respect of an institution that is being wound up—

• (a) the institution shall become liable to the Board, as in respect of a contractual debt incurred immediately before the institution began to be wound up, for an amount equal to the compensation payment;

• (b) the liability of the institution to the depositor in respect of any deposit or deposits of his (“the liability to the depositor”) shall be reduced by an amount equal to the compensation payment made or to be made to him by the Board; and

• (c) the duty of the liquidator of the insolvent institution to make payments to the Board on account of the liability referred to in paragraph (a) above (“the liability to the Board”) and to the depositor on account of the liability to him (after taking account of paragraph (b) above) shall be varied in accordance with subsection (3) below.

• (3) The variation referred to in subsection (2)(c) above is as follows—

• (a) in the first instance the liquidator shall pay to the Board instead of to the depositor any amount which, apart from this section, would be payable on account of the liability to the depositor except in so far as that liability relates to any such deposit as is mentioned in section 60(6) above; and

• (b) if at any time the total amount paid to the Board by virtue of paragraph (a) above and in respect of the liability to the Board equals the amount of the compensation payment made to the depositor, the liquidator shall thereafter pay to the depositor instead of to the Board any amount which, apart from this paragraph, would be payable to the Board in respect of the liability to the Board.

• (4) Where this section applies in respect of an institution that is not being wound up—

• (a) the institution shall, at the time when the compensation payment in respect of a deposit falls to be made by the Board, become liable to the Board for an amount equal to that payment; and

• (b) the liability of the institution to the depositor in respect of that deposit shall be reduced by an amount equal to that payment.

• (5) Where an institution is wound up after it has become insolvent subsections (2) and (3) above shall not apply to any compensation payment to the extent to which the Board has received a payment in respect of it by virtue of subsection (4)(a) above.

• (6) Where by virtue of section 61 above the compensation payment is or is to be made by the Board to a person other than the person to whom the institution is liable in respect of the deposit any reference in the foregoing provisions of this section to the liability to the depositor shall be construed as a reference to the liability of the institution to the person to whom that payment would fall to be made by the Board apart from that section.

• (7) Where the Board makes a payment under section 58(4) above in respect of an amount deducted from a payment due to a depositor this section shall have effect as if the amount had been paid to the depositor.

• (8) Rules may be made—

• (a) for England and Wales, under sections 411 and 412 of the Insolvency Act 1986;

• (b) for Scotland—

• (i) under the said section 411; and

• (ii) in relation to an institution whose estate may be sequestrated under the Bankruptcy (Scotland) Act 1985, by the Secretary of State under this subsection; and

• (c) for Northern Ireland, under Article 359 of the Insolvency (Northern Ireland) Order 1989 and section 65 of the Judicature (Northern Ireland) Act 1978,

for the purpose of integrating the procedure provided for in this section into the general procedure on a winding-up, bankruptcy or sequestration or under Part II of the Insolvency Act 1986 or Part III of the Insolvency (Northern Ireland) Order 1989.

Repayments in respect of contributions

Repayments in respect of contributions

63

• (1) Any money received by the Board under section 62 above (“recovered money”) shall not form part of the Fund but, for the remainder of the financial year of the Board in which it is received, shall be placed by the Board in an account with the Bank which shall as far as possible invest the money in Treasury bills; and any income arising from the money so invested during the remainder of the year shall be credited to the Fund.

• (2) The Board shall prepare a scheme for the making out of recovered money of repayments to institutions in respect of—

• (a) special contributions; and

• (b) so far as they are not attributable to an increase in the size of the Fund resulting from an order under subsection (2) of section 54 above, further contributions levied under that section,

which have been made in the financial year of the Board in which the money was received or in any previous such financial year.

• (3) A scheme under subsection (2) above—

• (a) shall provide for the making of repayments first in respect of special contributions and then, if those contributions can be repaid in full (taking into account any previous repayments under this section and under section 55(2) above) in respect of further contributions;

• (b) may make provision for repayments in respect of contributions made by an institution which has ceased to be a contributory institution to be made to a contributory institution which, in the opinion of the Board, is its successor; and

• (c) subject to paragraph (b) above, may exclude from the scheme further contributions levied from institutions which have ceased to be contributory institutions.

• (4) Except where special or further contributions can be repaid in full, repayments to institutions under this section shall be made pro rata according to the amount of the special or further contribution made by each of them.

• (5) If at the end of a financial year of the Board in which recovered money is received by it—

• (a) that money; and

• (b) the amount standing to the credit of the Fund, after any repayments made under section 55 above,

exceeds the maximum amount for the time being specified in section 54 (1) above the Board shall as soon as practicable make out of the recovered money, up to an amount not greater than the excess, the repayments required by the scheme under subsection (2) above and may out of the recovered money make such further repayments required by the scheme as will not reduce the amounts mentioned in paragraphs (a) and (b) above below the minimum amount for the time being specified in section 54(1) above.

• (6) If in any financial year of the Board—

• (a) any of the recovered money is not applied in making payments in accordance with subsection (5) above; or

• (b) the payments made in accordance with that subsection are sufficient to provide for the repayment in full of all the contributions to which the scheme relates,

any balance of that money shall be credited to the Fund.

Supplementary provisions

Borrowing powers

64

• (1) If in the course of operating the Fund it appears to the Board desirable to do so, the Board may borrow up to a total outstanding at any time of £50 million or such larger sum as, after consultation with the Board, the Treasury may from time to time by order prescribe.

• (2) An order under subsection (1) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

• (3) Any amount borrowed by virtue of this section shall be disregarded in ascertaining the amount standing to the credit of the Fund for the purposes of sections 54 (1), 55 (2) and 63 (5) above.

Power to obtain information

65

• (1) If required to do so by a request in writing made by the Board, the Authority may by notice in writing served on a contributory institution require the institution, within such time and at such place as may be specified in the notice, to provide the Board with such information and to produce to it such documents, or documents of such a description, as the Board may reasonably require for the purpose of determining the contributions of the institution under this Part of this Act.

• (2) Subsections (4), (5), (11) and (13) of section 39 above shall have effect in relation to any requirement imposed under subsection (1) above on a UK institution or participating non-EEA institution as they have effect in relation to a requirement imposed under this section.

• (3) The Board may by notice in writing served on an insolvent institution or, where a person has been appointed as liquidator or administrator of such an institution, on that person, require the institution or person, at such time or times and at such place as may be specified in the notice—

• (a) to provide the Board with such information; and

• (b) to produce to the Board such documents specified in the notice,

as the Board may reasonably require to enable it to carry out its functions under this Part of this Act.

• (4) Where, as a result of an institution being wound up, any documents have come into the possession of the Official Receiver or, in Northern Ireland, the Official Receiver for Northern Ireland, he shall permit any person duly authorised by the Board to inspect the documents for the purpose of establishing—

• (a) the identity of those of the institution’s depositors to whom the Board are liable to make a payment under section 58 above; and

• (b) the amount of the protected deposit held by each of the depositors.

Tax treatment of contributions and repayments

66

In computing for the purposes of the Tax Acts the profits or gains arising from the trade carried on by a contributory institution—

• (a) to the extent that it would not be deductible apart from this section, any sum expended by the institution in paying a contribution to the Fund may be deducted as an allowable expense;

• (b) any payment which is made to the institution by the Board under section 55 (2) above or pursuant to a scheme under section 63 (2) above shall be treated as a trading receipt.

Part III — Banking Names and Descriptions

Restriction on use of banking names

67

• (1) Subject to section 68 below, no person carrying on any business in the United Kingdom shall use any name which indicates or may reasonably be understood to indicate (whether in English or any other language) that he is a bank or banker or is carrying on a banking business unless he is an authorised institution to which this section applies.

• (2) This section applies to an authorised institution which—

• (a) is a company incorporated in the United Kingdom which has—

• (i) an issued share capital in respect of which the amount paid up is not less than £5 million (or an amount of equivalent value denominated wholly or partly otherwise than in sterling); or

• (ii) undistributable reserves falling within paragraph (a), (b) or (d) of section 264 (3) of the Companies Act 1985 or Article 272(3)(a), (b) or (d) of the Companies (Northern Ireland) Order 1986 of not less than that sum (or such an equivalent amount); or

• (iii) such undistributable reserves of an amount which together with the amount paid up in respect of its issued share capital equals not less than that sum (or such an equivalent amount); or

• (b) is a partnership formed under the law of any part of the United Kingdom in respect of which one or more designated fixed capital accounts are maintained to which there has been credited not less than £5 million (or such an equivalent amount).

• (3) For the purposes of subsection (2)(a) above “share capital” does not include share capital which under the terms on which it is issued is to be, or may at the option of the shareholder be, redeemed by the company.

• (4) For the purposes of subsection (2)(b) above “designated fixed capital account”, in relation to a partnership, means an account—

• (a) which is prepared and designated as such under the terms of the partnership agreement;

• (b) which shows capital contributed by the partners; and

• (c) from which under the terms of that agreement an amount representing capital may only be withdrawn by a partner if—

• (i) he ceases to be a partner and an equal amount is transferred to a designated fixed capital account by his former partners or any person replacing him as their partner; or

• (ii) the partnership is otherwise dissolved or wound up.

• (5) An authorised institution to which subsection (2) above applies whose issued share capital, undistributable reserves or designated fixed capital account is denominated wholly or partly otherwise than in sterling shall not be regarded as ceasing to be such an institution by reason only of a fluctuation in the rate of exchange of sterling unless and until it has ceased to satisfy any of the conditions in that subsection for a continuous period of three months.

• (6) The Treasury may from time to time after consultation with the Authority by order amend subsection (2)(a) and (b) above so as to substitute for the sum for the time being specified in that subsection such other sum as may be specified in the order; but an order under this subsection shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Exemptions from s.67

68

• (1) Section 67 above does not prohibit the use of a name by a relevant savings bank, a municipal bank or a school bank if the name contains an indication that the bank or body is a savings bank, municipal bank or, as the case may be, a school bank.

• (2) In subsection (1) above—

• “relevant savings bank” means—the National Savings Bank; andany penny savings bank;

• “school bank” means a body of persons certified as a school bank by the National Savings Bank or an authorised institution.

• (3) Section 67 above does not prohibit the use by an authorised institution which is a company incorporated under the law of a country or territory outside the United Kingdom or is formed under the law of a member State other then the United Kingdom of a name under which it carries on business in that country or territory or State (or an approximate translation in English of that name).

• (4) Section 67 above does not prohibit the use by—

• (a) an authorised institution which is a wholly-owned subsidiary of an authorised institution to which that section or subsection (3) above applies; or

• (b) a company which has a wholly-owned subsidiary which is an authorised institution to which that section or subsection applies,

of a name which includes the name of the authorised institution to which that section or subsection applies for the purpose of indicating the connection between the two companies

• (5) Section 67 above does not prohibit the use by an overseas institution (within the meaning of Part IV of this Act) which has its principal place of business in a country or territory outside the United Kingdom and a representative office in the United Kingdom of the name under which it carries on business in that country or territory (or an approximate translation in English of that name) if—

• (a) the name is used in immediate conjunction with the description “representative office”; and

• (b) where the name appears in writing, that description is at least as prominent as the name;

and in this subsection “representative office” has the same meaning as in Part IV of this Act.

• (6) Section 67 above does not apply to—

• (a) the Bank;

• (b) the central bank of a member State other than the United Kingdom;

• (c) the European Investment Bank;

• (d) the International Bank for Reconstruction and Development;

• (e) the African Development Bank;

• (f) the Asian Development Bank;

• (g) the Caribbean Development Bank;

• (h) the Inter-American Development Bank.

• (7) The Treasury may, after consultation with the Authority, by order provide—

• (a) that the prohibition in section 67 above shall not apply to any person or class of persons; or

• (b) that that prohibition shall apply to a person mentioned in any of paragraphs (c) to (h) of subsection (6) above or a person previously exempted from it by virtue of an order under paragraph (a) above.

• (8) An order under paragraph (a) of subsection (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no order shall be made under paragraph (b) of that subsection unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

• (9) Nothing in section 67 above shall prevent an institution which ceases to be an authorised institution to which that section or subsection (4) above applies or ceases to be exempted from the prohibition in that section by virtue of subsection (1) above from continuing to use any name it was previously permitted to use by virtue of that provision during the period of six months beginning with the day when it ceases to be such an institution.

Restriction on use of banking descriptions

69

• (1) No person carrying on any business in the United Kingdom shall so describe himself or hold himself out as to indicate or reasonably be understood to indicate (whether in English or in any other language) that he is a bank or banker or is carrying on a banking business unless he is an authorised institution or is exempted from the requirements of this subsection under the following provisions of this section.

• (2) Subsection (1) above shall not be taken to authorise the use by an authorised institution to which the prohibition in section 67 above applies of any description of itself as a bank or banker or as carrying on a banking business which is in such immediate conjunction with the name of the institution that the description might reasonably be thought to be part of it.

• (3) Subsection (1) above does not prohibit the use by a building society authorised under the Building Societies Act 1986 of any description of itself as providing banking services unless the description is in such immediate conjunction with its name that it might reasonably be thought to be part of it.

• (4) Subsection (1) above does not prohibit a person from using the expression “bank” or “banker” (or a similar expression) where it is necessary for him to do so in order to be able to assert that he is complying with, or entitled to take advantage of, any enactment, any instrument made under an enactment, any international agreement, any rule of law or any commercial usage or practice which applies to a person by virtue of his being a bank or banker.

• (5) Subsection (1) above does not prohibit the use of a description by a relevant savings bank, a municipal bank or a school bank if the description is accompanied by a statement that the bank or body is a savings bank, a municipal bank or, as the case may be, a school bank; and for the purposes of this subsection “relevant savings bank” and “school bank” have the same meanings as in section 68 above.

• (6) Subsection (1) above does not apply to—

• (a) the Bank;

• (b) the central bank of a member State other than the United Kingdom;

• (c) the European Investment Bank;

• (d) the International Bank for Reconstruction and Development;

• (e) the International Finance Corporation;

• (f) the African Development Bank;

• (g) the Asian Development Bank;

• (h) the Caribbean Development Bank;

• (i) the Inter-American Development Bank.

• (7) The Treasury may, after consultation with the Authority, by order provide—

• (a) that the prohibition in subsection (1) above shall not apply to any person or class of persons; or

• (b) that that prohibition shall apply to a person mentioned in any of paragraphs (c) to (i) of subsection (6) above or a person previously exempted from it by an order under paragraph (a) above.

• (8) An order under paragraph (a) of subsection (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no order shall be made under paragraph (b) of that subsection unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

Power to object to institution's names

70

• (1) Where an institution applies for authorisation under this Act it shall give notice to the Authority of any name it is using or proposes to use for the purposes of or in connection with any business carried on by it and the Authority may give the institution notice in writing—

• (a) that it objects to the notified name; or

• (b) in the case of an institution which is or will be obliged to disclose any name in connection with any business carried on by it by virtue of section 4 of the Business Names Act 1985 or Article 6 of the Business Names (Northern Ireland) Order 1986, that it objects to that name.

• (2) Where an authorised institution proposes to change any name it uses for the purposes of or in connection with any business carried on by it or, in the case of such an institution as is mentioned in subsection (1)(b) above, any such name as is there mentioned, it shall give notice to the Authority of the proposed name and the Authority may within the period of two months beginning with the day on which it receives the notification give notice to the institution in writing that it objects to the proposed name.

• (3) The Authority shall not give notice objecting to a name under subsection (1) or (2) above unless it considers that the name is misleading to the public or otherwise undesirable and, in the case of the use of a name by an authorised institution to which section 67 above applies—

• (a) the whole of the name shall be taken into account in considering whether it is misleading or undesirable; but

• (b) no objection may be made to so much of the name as it is entitled to use by virtue of that section.

• (4) Where as a result of a material change in circumstances since the time when notice was given to the Authority under subsection (1) or (2) above or as a result of further information becoming available to the Authority since that time, it appears to the Authority that a name to which it might have objected under that subsection gives so misleading an indication of the nature of the institution’s activities as to be likely to cause harm to the public, the Authority may give notice in writing to the institution objecting to the name.

• (5) Any notice to be given by an institution under this section shall be given in such manner and form as the Authority may specify and shall be accompanied by such information or documents as the Authority may reasonably require.

Effect of notices under s.70 and appeals

71

• (1) Where the Authority has given notice to an authorised institution under section 70 above the institution shall not use the name to which the Authority has objected for the purposes of or in connection with any business carried on in the United Kingdom after the objection has taken effect; and for the purposes of this subsection the disclosure of a name in connection with such a business by virtue of section 4 of the Business Names Act 1985 or Article 6 of the Business Names (Northern Ireland) Order 1986 shall be treated (if it would not otherwise be) as use for the purposes of that business.

• (2) For the purposes of this section an objection under section 70(1) or (2) above takes effect when the institution receives the notice of objection.

• (3) An institution to which a notice of objection is given under section 70(1) or (2) above may within the period of three weeks beginning with the day on which it receives the notice apply to the court to set aside the objection and on such an application the court may set it aside or confirm it (but without prejudice to its operation before that time).

• (4) For the purposes of this section an objection under section 70(4) above takes effect—

• (a) in a case where no application is made under subsection (5) below, at the expiry of the period of two months beginning with the day on which the institution receives the notice of objection or such longer period as the notice may specify; or

• (b) where an application is made under subsection (5) below and the court confirms the objection, after such period as the court may specify.

• (5) An institution to which a notice of objection is given under section 70(4) above may within the period of three weeks beginning with the day on which it receives the notice apply to the court to set aside the objection.

• (6) In this section “the court” means the High Court, the Court of Session or the High Court in Northern Ireland according to whether—

• (a) if the institution concerned is a company registered in the United Kingdom, it is registered in England and Wales, Scotland or Northern Ireland; and

• (b) in the case of any other institution, its principal or prospective principal place of business in the United Kingdom is situated in England and Wales, Scotland or Northern Ireland.

Registration of substitute corporate name by oversea company

72

• (1) Where the Authority gives notice under section 70 above objecting to the corporate name of a company incorporated outside the United Kingdom, subsection (4) of section 694 of the Companies Act 1985 or, in Northern Ireland, paragraph (4) of Article 644 of the Companies (Northern Ireland) Order 1986 shall apply, subject to subsection (2) below, as it applies where a notice is served on a company under subsection (1) or (2) of that section or, as the case may be, paragraph (1) or (2) of that Article.

• (2) No statement or further statement may be delivered under subsection (4) of section 694 or paragraph (4) of Article 644 by virtue of subsection (1) above unless the Authority has signified that it does not object to the name specified in the statement.

• (3) Section 70(2) above shall not apply to a proposed change of a name which has been registered under section 694(4) of the Companies Act 1985 or Article 644(4) of the Companies (Northern Ireland) Order 1986 by virtue of subsection (1) above.

Offences under Part III

73

A person who contravenes any provision in this Part of this Act shall be guilty of an offence and liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding the fifth level on the standard scale or to both and, where the contravention involves a public display or exhibition of any name or description, there shall be a fresh contravention on each day on which the person causes or permits the display or exhibition to continue.

Part IV — Overseas Institutions with Representative Offices

Meaning of "overseas institution" and "representative office"

74

• (1) In this Part of this Act “overseas institution” means a person (other than an authorised institution or any person for the time being specified in Schedule 2 to this Act) who—

• (a) is a body corporate incorporated in a country or territory outside the United Kingdom or a partnership or other unincorporated association formed under the law of such a country or territory; or

• (b) has his principal place of business in such a country or territory,

being, in either case, a person who satisfies one of the conditions mentioned in subsection (2) below.

• (2) The conditions referred to in subsection (1) above are—

• (a) that the person’s principal place of business is outside the United Kingdom and the person is authorised by the relevant supervisory authority in a country or territory outside the United Kingdom;

• (b) that the person describes himself or holds himself out as being authorised by such an authority in a country or territory outside the United Kingdom;

• (c) that the person uses any name or in any other way so describes himself or holds himself out as to indicate or reasonably be understood to indicate (whether in English or any other language), that he is a bank or banker or is carrying on a banking business (whether in the United Kingdom or elsewhere).

• (3) In this Part of this Act “representative office”, in relation to any overseas institution, means premises from which the deposit-taking, lending or other financial or banking activities of the overseas institution are promoted or assisted in any way; and “establishment”, in relation to such an office, includes the making of any arrangements by virtue of which such activities are promoted or assisted from it.

Notice of establishment of representative office

75

• (1) An overseas institution shall not establish a representative office in the United Kingdom unless it has given not less than two months’ notice to the Authority that it proposes to establish such an office and a notice under this subsection shall specify—

• (a) any name the institution proposes to use in relation to activities conducted by it in the United Kingdom after the establishment of that office; and

• (b) in the case of an institution which will be obliged to disclose any name in connection with those activities by virtue of section 4 of the Business Names Act 1985 or Article 6 of the Business Names (Northern Ireland) Order 1986, that name.

• (2) Where an overseas institution has established a representative office in the United Kingdom before the date on which this Part of this Act comes into force and has not given notice of that fact to the Authority under section 40 of the Banking Act 1979 it shall give notice in writing to the Authority of the continued existence of that office within the period of two months beginning with that date; and the obligation of an overseas institution to give notice under this subsection in respect of the establishment of an office established within the period of one month ending with that date shall supersede any obligation to give notice in respect of that matter under that section.

• (3) A notice under this section shall be given in such manner and form as the Authority may specify.

Power to object to names of overseas institutions

76

• (1) An overseas institution which has established a representative office in the United Kingdom shall not change any name used by it in relation to activities conducted by it in the United Kingdom or, in the case of an institution which is obliged to disclose any name in connection with those activities as mentioned in section 75(1) above, that name unless it has given not less than two months’ notice to the Authority of the proposed name.

• (2) Where notice of a name is given to the Authority by an overseas institution under section 75(1) or subsection (1) above and it appears to the Authority that the name is misleading to the public or otherwise undesirable it may, within the period of two months beginning with the day on which that notice was given, give notice in writing to the institution that it objects to that name.

• (3) Where it appears to the Authority that an overseas institution which has established a representative office in the United Kingdom before the date on which this Part of this Act comes into force is using a name in relation to activities conducted by it in the United Kingdom which is misleading to the public or otherwise undesirable, the Authority may give notice in writing to the institution that it objects to the name—

• (a) in a case where the Authority was notified of the establishment of the representative office before that date, within the period of six months beginning with that date; and

• (b) otherwise, within the period of six months beginning with the date on which the establishment of the representative office comes to the Authority’s knowledge.

• (4) Where, as a result of a material change in circumstances since the time when notice of a name was given to the Authority under section 75(1) or subsection (1) above or as a result of further information becoming available to the Authority since that time, it appears to the Authority that the name is so misleading as to be likely to cause harm to the public, the Authority may give notice in writing to the overseas institution in question that it objects to the name.

Effect of notices under s.76 and appeals

77

• (1) Where the Authority has given notice under section 76 above to an overseas institution the institution shall not use the name to which the Authority has objected in relation to activities conducted by it in the United Kingdom after the objection has taken effect; and for the purposes of this subsection the disclosure of a name in connection with those activities as mentioned in section 75(1)(b) above shall be treated (if it would not otherwise be) as use of that name in relation to those activities.

• (2) For the purposes of this section an objection under section 76(2) above takes effect when the institution receives the notice of objection.

• (3) An institution to which a notice of objection is given under section 76(2) above may within the period of three weeks beginning with the day on which it receives the notice apply to the court to set aside the objection and on such an application the court may set it aside or confirm it (but without prejudice to its operation before that time).

• (4) For the purposes of this section an objection under section 76(3) or (4) above takes effect—

• (a) in a case where no application is made under subsection (5) below, at the expiry of the period of two months beginning with the day on which the institution receives the notice of objection or such longer period as the notice may specify; or

• (b) where an application is made under subsection (5) below and the court confirms the objection, after such period as the court may specify.

• (5) An institution to which a notice of objection is given under section 76(3) or (4) above may within the period of three weeks beginning with the day on which it receives the notice apply to the court to set aside the objection.

• (6) In this section “the court” means the High Court, the Court of Session or the High Court in Northern Ireland according to whether the representative office of the institution in question is situated in England and Wales, Scotland or Northern Ireland.

Registration of substitute corporate name by overseas institution

78

• (1) Where the Authority gives notice under section 76 above objecting to the corporate name of an overseas institution, subsection (4) of section 694 of the Companies Act 1985 or, in Northern Ireland, paragraph (4) of Article 644 of the Companies (Northern Ireland) Order 1986 shall apply, subject to subsection (2) below, as it applies where a notice is served on a company under subsection (1) or (2) of that section or, as the case may be, paragraph (1) or (2) of that Article.

• (2) No statement or further statement may be delivered under subsection (4) of section 694 or paragraph (4) of Article 644 by virtue of subsection (1) above unless the Authority has signified that it does not object to the name specified in the statement.

• (3) Section 76(1) above shall not apply to a change of a name which has been registered under section 694(4) of the Companies Act 1985 or Article 644(4) of the Companies (Northern Ireland) Order 1986 by virtue of subsection (1) above.

Duty to provide information and documents

79

• (1) The Authority may by notice in writing require any overseas institution which has established a representative office in the United Kingdom or has given notice to the Authority under section 75(1) above of its intention to establish such an office to provide the Authority with such information or documents as the Authority may reasonably require.

• (2) Without prejudice to the generality of subsection (1) above, the Authority may by notice in writing require such an overseas institution to deliver to the Authority—

• (a) in the case of an overseas institution which is a company incorporated in the United Kingdom, copies of the documents which the company is required to send to the registrar of companies under section 10 of the Companies Act 1985 or Article 21 of the Companies (Northern Ireland) Order 1986;

• (aa) in the case of an overseas institution to which section 690A of that Act applies, copies of the documents which it is required to deliver for registration in accordance with paragraph 1(1) or (2) of Schedule 21A of that Act;

• (b) in the case of an overseas institution to which section 691(1) of that Act or Article 641(1) of that Order applies, copies of the document which it is required to deliver for registration in accordance with that section or Article;

• (c) in the case of any other overseas institution (other than an individual), information corresponding to that which would be contained in the documents which it would be required to deliver as mentioned in paragraph (b) above if it were a company to which section 691(1) applied;

• (d) in the case of an overseas institution which is authorised to take deposits or conduct banking business in a country or territory outside the United Kingdom by the relevant supervisory authority in that country or territory, a certified copy of any certificate from that authority conferring such authorisationon it.

• (3) An overseas institution to which a notice is given under subsection (1) or (2) above shall comply with the notice—

• (a) in the case of an institution which has established a representative office in the United Kingdom, before the end of such period as is specified in the notice; and

• (b) in the case of an institution which has given notice under section 75(1) above of its intention to establish such an office, before it establishes the office.

• (4) If at any time an overseas institution which has been required to deliver information or documents to the Authority under subsection (2) above is required to deliver any document or give notice to the registrar of companies under section 18 or 288(2) of the said Act of 1985 or Article 29 or 296(2) of the said Order of 1986, it shall no later than the time by which it must have complied with that requirement deliver a copy of that document or give notice to the Authority.

• (5) If at any time an overseas institution is required to furnish any document or give notice to the registrar of companies under section 692, 695A(3) or 696 of, or paragraph 7 or 8 of Schedule 21A to, the said Act of 1985 or Article 642 or 646 of the said Order of 1986 (or would be so required if it were a company to which that section, paragraph or Article applied), it shall no later than the time by which it must have complied with that requirement deliver a copy of that document to the Authority.

• (6) If at any time a certificate of authorisation of which a copy was required to be delivered to the Authority under subsection (2)(d) above is amended or the authorisation is withdrawn, the overseas institution shall no later than one month after the amendment or withdrawal deliver a copy of the amended certificate or, as the case may be, a notice stating that the authorisation has been withdrawn to the Authority.

• (7) The Treasury may after consultation with the Authority by order provide that sections 39 and 40 above shall apply in relation to overseas institutions as they apply in relation to authorised institutions; but no order shall be made under this section unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

Regulations imposing requirements on overseas-based banks

80

• (1) The Treasury may, after consultation with the Authority, by regulations impose on overseas institutions which have established or propose to establish representative offices in the United Kingdom such requirements as the Treasury consider appropriate in connection with those offices and the activities conducted from them.

• (2) Regulations under this section may in particular require the establishment or continued existence of a representative office to be authorised by the Authority and such regulations may make provision for—

• (a) the granting and revocation of such authorisations;

• (b) the imposition of conditions in connection with the grant or retention of such authorisations; and

• (c) appeals against the refusal or withdrawal of such authorisations or the imposition of such conditions.

• (3) No regulations shall be made under this section unless a draft of the regulations has been laid before and approved by a resolution of each House of Parliament.

Offences under Part IV

81

A person who contravenes any provision in this Part of this Act or any requirement imposed under it shall be guilty of an offence and liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding the fifth level on the standard scale or to both and, where the contravention involves a public display or exhibition of any name or description, there shall be a fresh contravention on each day on which the person causes or permits the display or exhibition to continue.

Part V — Restriction on Disclosure of Information

Restricted information

82

• (1) Except as provided by the subsequent provisions of this Part of this Act—

• (a) no person who under or for the purposes of this Act receives information relating to the business or other affairs of any person; and

• (b) no person who obtains any such information directly or indirectly from a person who has received it as aforesaid,

shall disclose the information without the consent of the person to whom it relates and (if different) the person from whom it was received as aforesaid.

• (2) This section does not apply to information which at the time of the disclosure is or has already been made available to the public from other sources or to information in the form of a summary or collection of information so framed as not to enable information relating to any particular person to be ascertained from it.

• (3) Any person who discloses information in contravention of this section shall be guilty of an offence and liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;

• (b) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.

Disclosure for facilitating discharge of functions by the Bank

83

• (1) Section 82 above does not preclude the disclosure of information in any case in which disclosure is for the purpose of enabling or assisting the Authority to discharge.

• (a) its function as a monetary authority; or

• (aa) its functions in its capacity as a designated agency within the meaning of the Financial Services Act 1986; or

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) its functions as a supervisor of money market . . . institutions

• (2) Without prejudice to the generality of subsection (1) above, that section does not preclude the disclosure of information by the Authority to the auditor of an authorised institution or former authorised institution if it appears to the Authority that disclosing the information would enable or assist the Authority to discharge the functions mentioned in that subsection or would otherwise be in the interests of depositors.

• (3) If, in order to enable or assist the Authority properly to discharge any of its functions under this Act, the Authority considers it necessary to seek advice from any qualified person on any matter of law, accountancy, valuation or other matter requiring the exercise of professional skill, section 82 above does not preclude the disclosure by the Authority to that person of such information as appears to the Authority to be necessary to ensure that he isproperly informed with respect to the matters on which his advice is sought.

Disclosure for facilitating discharge of functions by other supervisory authorities

84

• (1) Section 82 above does not preclude the disclosure by the Authority of information to any person specified in the first column of the following Table if the Authority considers that the disclosure would enable or assist that person to discharge the functions specified in relation to him in the second column of that Table.