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 a relevant person has
incurred or might incur in connection with the recapitalisation of the institution or the exercise of the stabilisation power.

(3)

The Bank of England must not require the scheme manager to make
a recapitalisation payment if it has directed the financial institution to maintain an end-state Minimum Requirement for Own Funds and Eligible Liabilities (MREL) exceeding minimum capital requirements.

(4)

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

(5)

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.

(6)

In subsection (2) (b) , “relevant person” means—

(a)

the Treasury,

(b)

a bridge bank, or

(c)

an asset management vehicle.

(7)

In this section, “bridge bank” and “asset management vehicle” have
the meanings given by sections 12 and 12ZA, respectively, of the Banking Act 2009.

(8)

In this section and in section 214H , “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 of this Act) insert—

“214F Recapitalisation payment: report

(1)

This section applies where the Bank of England requires the scheme
manager to make a recapitalisation payment under section 214E .

(2)

The Bank must report to the Chancellor of the Exchequer about—

(a)

the exercise of the power to require a recapitalisation payment
to be made, and

(b)

the stabilisation power and the stabilisation option to which
the payment relates.

(3)

The report (“the final report”) must—

(a)

comply with such requirements as to content, and

(b)

be provided within such period or at such time,

as the Treasury may specify.

(4)

The Bank must provide an interim report if—

(a)

the period specified under subsection (3) (b) is a period of more
than 3 months beginning with the day on which the Bank requires the recapitalisation payment in question (“the first 3 months”), or the time specified under subsection (3) (b) is after the first 3 months, and

(b)

the Bank does not provide the final report within the first 3
months.

(5)

An interim report must—

(a)

comply with such requirements as to content as the Treasury
may specify, and

(b)

be provided within the first 3 months.

(6)

Subject to subsection (7) , the Chancellor of the Exchequer must lay
each report, and any interim report, before Parliament.

(7)

The Chancellor of the Exchequer may omit from the report, and any
interim report, any information which the Chancellor of the Exchequer considers it would not be in the public interest to publish.”

In Part 15 of the Financial Services and Markets Act 2000, after section 214F (as inserted by section 2 of this Act) insert—

“214G Notification to Parliamentary Committees

(1)

Where the Bank of England requires the scheme manager to make a
recapitalisation payment under section 214E , the Bank must, as soon as reasonably practicable, notify in writing the chair of each relevant Parliamentary Committee that it has done so.

(2)

The relevant Parliamentary Committees are—

(a)

the Treasury Committee of the House of Commons, and

(b)

the Financial Services Regulation Committee of the House of
Lords.

(3)

A reference to a committee in subsection (2) —

(a)

if the name of that committee is changed, is to be treated as a
reference to that committee by its new name, and

(b)

if the functions of that committee (or substantially
corresponding functions) become functions of a different committee, is to be treated as a reference to the committee by which those functions are exercisable.

(4)

Any question arising under subsection (3) is to be determined by—

(a)

the Speaker of the House of Commons, in relation to
committees of the House of Commons, and

(b)

the Chairman of Committees of the House of Lords, in relation
to committees of the House of Lords.”

In Part 15 of the Financial Services and Markets Act 2000, after section 214G (as inserted by section 3 of this Act) insert—

“214H 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.”

In the Banking Act 2009, in section 5 (code of practice), after subsection (2) insert—

“(2A)

The code must include guidance on the contents of a report, and of
any interim report, under section 214F of the Financial Services and Markets Act 2000 (recapitalisation payment: report).”