In Part 15 of the Financial Services and Markets Act 2000 (the Financial
Services Compensation Scheme), after section 214D insert—

“214E Recapitalisation payments

(1)

The Bank of England may require the scheme manager to make a
recapitalisation payment to the Bank or another person where the
Bank has exercised or decided to exercise a stabilisation power under
Part 1 of the Banking Act 2009 in respect of a financial institution so
as to achieve—

(a)

a sale of the institution to a private sector purchaser (see section
11 of that Act), or

(b)

a transfer of the institution to a bridge bank (see section 12 of
that Act).

(2)

A recapitalisation payment is a payment in respect of the Bank’s
estimate of—

(a)

the costs likely to be required for the recapitalisation of the
financial institution, and

(b)

any other expenses that the Bank or another person has
incurred or might incur in connection with the recapitalisation
of the institution or the exercise of the stabilisation power.

(3)

Before exercising the power in subsection (1) , the Bank must consult
the scheme manager.

(4)

A recapitalisation payment made by the scheme manager under
subsection (1) is to be treated for the purposes of this Part as an
expense under the compensation scheme.

(5)

In this section and in section 214F , “financial institution” means a
bank, building society or investment firm (within the meanings of Part
1 of the Banking Act 2009).”

In Part 15 of the Financial Services and Markets Act 2000, after section 214E
(as inserted by section 1 ) insert—

“214F Reimbursement in respect of a recapitalisation payment

(1)

The Bank must reimburse the scheme manager for any recapitalisation
payment, or any part of a recapitalisation payment, relating to a
financial institution, which is not needed to cover the costs and
expenses mentioned in section 214E (2) (a) and (b) because—

(a)

those costs and expenses were lower than the Bank expected,
or

(b)

the Bank recovers an amount in relation to the financial
institution which it can use to defray those costs and expenses.

(2)

For the purposes of subsection (1) —

(a)

the reference to the Bank recovering an amount in relation to
the financial institution includes recovering an amount as a
result of the sale of the institution or the institution being
wound up or otherwise;

(b)

where more than one recapitalisation payment is required in
relation to a financial institution, references to a recapitalisation
payment are to be read as references to the sum of those
payments;

(c)

the reference to the sale of a financial institution in paragraph
(a) is to the sale of all or part of the business of the financial
institution as part of, or as a result of, the achievement of a
stabilisation option.”