§ Amendments made: No. 61, in page 80, line 31, at end insert—
§ 'Composition of board of directors
§ 2A. In the case of an institution incorporated in the United Kingdom the directors include such number (if any) of directors without executive responsibility for the management of its business as the Bank considers appropriate having regard to the circumstances of the institution and the nature and scale of its operations.'.
§ No. 62, in page 81, line 19, leave out second 'and' and insert (7A)'.
No. 62A, in page 81, line 22, at end insert
'and in determining whether those systems are adequate the Bank shall have regard to the functions and responsibilities in respect of them of any such directors of the institution as are mentioned in paragraph 2A above.'.—[Mr. Nelson.]
§ No. 65, in page 81, line 34, after 'denominated', insert 'wholly or partly'.—[Mr. Ian Stewart.]
§ 'Use of banking names
§ 12A.—(1) Subject to sub-paragraph (2) below, section 64 of this Act does not prohibit the use by an institution which is incorporated in or is a partnership formed under the law of any part of the United Kingdom and is deemed to be an authorised institution by virtue of paragraph 2 above of a name which was its registered business or company name immediately before the coming into force of Part HI of this Act or of section 36 of the former Act.
§ (2) Sub-paragraph (1) above shall cease to apply—
- (a) in the case of an incorporated institution, if the total value in sterling of its issued share capital and undistributable reserves falls below their total value at the coming into force of Part III of this Act; or
- (b) in the case of a partnership in respect of which one or more designated fixed capital accounts are maintained, if the total value in sterling of those accounts falls below their value at that time.
§ (3) Section 64 of this Act does not prohibit the use by—
- (a) an authorised institution which is a wholly-owned subsidiary of an institution to which sub-paragraph (1) applies; or
- (b) a company which has a wholly-owned subsidiary which is an institution to which that sub-paragraph applies,
§ (4) In sub-paragraph (2) above "share capital" and "designated fixed capital account" have the same meaning as in subsection (2) of section 64 of this Act and "undistributable reserves" means such reserves as mentioned in paragraph (a) (ii) of that subsection.'.
§ This is an important addition to the Bill. In Committee, I undertook to introduce amendments to this effect so that the use by authorised institutions of banking names just prior to the Act coming into force would be grandfathered — they would be carried forward—after the enactment of the legislation. I said that we would do what I described as great-grandfathering with the banking names which were in use by authorised institutions prior to the Banking Act 1979.
§ I have great pleasure in moving this amendment because it was one of those aspects of the 1979 legislation 1146 which I remember opposing. Therefore, it is a privilege, eight years later, to be able to remedy what I considered to be an injustice at that time.9.15 pm
§ Sir Eldon Griffiths (Bury St. Edmunds)
As my hon. Friend the Economic Secretary has said, the essence of the amendment is that the damage done by the 1979 Act to a number of small but highly reputable banks — among them the Manchester Exchange Trust and Reliance Trust, the Salvation Army bank — is to be undone. The 1979 Act took away from these highly reputable institutions the right which they have exercised for a century or more to describe themselves, quite accurately, as banks. When the Bill was introduced, it would effectively have continued that prohibition by adding another criterion which needed to be met before the name "bank" could be used—an equity capital of not less than £5 million.
On behalf of the Reliance Trust and Manex—I have no interest in either—I made some detailed submissions to my hon. Friend the Economic Secretary. He received them courteously. He listened to those representations, but quite properly he gave no commitments. Subsequently, as I understand it, he had wide consultations. In Standing Committee, in response to amendments moved elegantly by my hon. Friend the M ember for Chichester (Mr. Nelson), my hon. Friend the Economic Secretary gave us the good news—he would move amendments to allow those small institutions to return to the pre-1979 situation of being able to call themselves banks.
This new grandfathering, and indeed great-grandfathering, amendment gives full effect to my hon. Friend's undertaking to the Committee. On behalf of the Salvation Army and of the directors and shareholders of the Manchester Exchange Trust, I express my thanks—first, to my hon. Friend the Member for Chichester who moved those amendments in Committee, secondly, to all members of the Committee for the support which they gave at once to those amendments and, most of all, to my hon. Friend the Economic Secretary who moved this amendment.
There is just one rather curious consequence of the amendment for the Manchester Exchange Trust. In recent years, it has become widely known in the City and among its customers and shareholders by the shorthand title of Manex. As a result of the amendment, it will have to revert to its pre-1979 title, the whole works—Manchester Exchange Trust, which is not quite so punchy a name. I very much hope that, when the Bank of England considers any request by this institution to call itself the Manex bank, it will not be given too difficult a passage. But, of course, that is a matter for the Bank of England, not for the House.
I should like to conclude by quoting some words that I used on Second Reading when I said of my hon. Friend the Economic Secretary that he was an "astute" and "civilised" Minister. I should like to repeat those adjectives but add another word which has found common currency in banking circles in recent years—my hon. Friend is a "listening" Minister. Ministers who listen learn, and they serve the Government and the House well. I am very grateful to my hon. Friend.
§ Mr. Nelson
I should like to add briefly to the elegant words of my hon. Friend the Member for Bury St. Edmunds (Sir E. Griffiths) and express my thanks and 1147 tribute to my hon. Friend the Economic Secretary for keeping faith with the Committee and bringing forward the amendment. It was a great joy to my hon. Friend the Member for Bury St. Edmunds, to other members of the Standing Committee and to me to meet, subsequent to the passage of the amendments in Committee, the representatives of the Manchester Exchange Trust and of the Salvation Army. That was a small step but one that gave them great pleasure. It certainly enhanced their views as to how representation to Members of Parliament can translate itself into changes in the law. I should like to add to the tributes that have been made and say how grateful I am to my hon. Friend for making the changes that he has proposed tonight.
§ Amendment agreed to.