Session 2: the UK case
5th DICJ Roundtable 3/4 March 2010 Introduction • Explanation of factual background to UK authorities’ intervention in banking sector • Overview of principal players involved in working with the (part-)nationalised banks. Banks with Government shareholdings
• Royal Bank of Scotland
• Bradford & Bingley Banks subject to other intervention
• Heritable
• Kaupthing, Singer & Friedlander (KS&F)
• Landsbanki ‘Icesave’
• London Scottish Bank
• Dunfermline Building Society The tools used (1)
• Recapitalisation • Asset Protection Scheme (APS) • Credit Guarantee Scheme (CGS) • Asset Backed Securities Guarantee Scheme • Special Liquidity Scheme (SLS) • Asset Purchase Facility (APF) The tools used (2)
• Special Resolution Regime (SRR): – Private sector purchaser tool – Bridge bank tool – Bank Insolvency Procedure – Temporary Public Ownership tool The institutional structure
• FSA: – Ongoing supervision – „Triggering‟ SRR
• Bank of England: – Operating the SRR – Special Liquidity Scheme – Asset Purchase Facility The institutional structure (1)
• UK Financial Investments (UKFI) – Wholly owned by the Government – Manages Government shareholdings in banks – “…to protect and create value for the taxpayer as shareholder with due regard to the maintenance of financial stability and to act in a way that promotes competition” The institutional structure (2)
• Asset Protection Agency – An Executive Agency of the Treasury – Operates the Asset Protection Scheme on behalf of the Treasury. – Monitoring (and intervening) in the management of assets in the scheme – Reviewing / approving significant decisions in relation to those assets – Verifying the losses on covered assets in order for the APS to make appropriate payments – Forecasting future losses under the APS to enable the Treasury to predict any fiscal impact The institutional structure (3)
• European Commission – State Aid approval of restructurings: – Northern Rock: two separate companies (back book of mortgages managed separately) – Lloyds: divestments – RBS: divestments and APS – B&B: orderly wind down of state-owned business