§ Baroness Gardner of Parkes
asked Her Majesty's Government:
When they will appoint a vesting day for the reorganisation of the TSB Group.
§ Lord Brabazon of Tara
Section 1(4) of the Trustee Savings Banks Act 1985 provides that the Treasury is to appoint the vesting day for the reorganisation of the TSB Group under that Act after consulting the TSB Central Board. The Treasury have now consulted the central board and considered the letter dated 10th July from the chairman, Sir John Read. This exchange of letters between my honourable friend the Economic Secretary to the Treasury and Sir John Read is reproduced below. The Treasury have today by order appointed 21st July as the vesting day for the purposes of the 1985 Act.
Following are the letters referred to above.
Treasury Chambers, Parliament Street, SW1P 3AG Sir John Read Chairman TSB Central Board 25 Milk Street London EC2V 8LU 9 July 1986
The House of Lords unanimously dismissed on 3 July the appeals brought by Mr Ross and Dr Vincent, and upheld the cross-appeal by the Central Board and TSB England and Wales. The judgments confirm that TSB depositors are entitled solely to the repayment of their deposits with interest (where applicable) according to the terms of their accounts but that they have no rights in the assets of the banks, which was reflected in the White Paper which preceded the Trustee Savings Banks Act 1985.
Section 1 (4) of the TSB Act 1985 provides that the Treasury is to appoint the vesting day for the re-organisation of the TSB Group under that Act after consulting the Central Board.
Now that the legal position has been clarified and in the light of the discussions which the Treasury and the Central Board have had about the implementation of the 1985 Act, the Treasury is considering whether it may now be appropriate to appoint a vesting day in the near future. I should therefore like formally to invite the Central Board to let me have its views on this, as the 1985 Act requires, and to report on where matters stand regarding the Board's related undertakings and announced intentions.
TSB Group Trustee Savings Banks Central Board 25 Milk Street London EC2V 8LU Telephone 01–606 7070
From Sir John Read, Chairman 10th July, 1986. I. Stewart, Esq., Economic Secretary, H.M. Treasury, Parliament Street, London, SWIP 3AG.
Thank you for your Letter of 9th July. The TSB Central Board, which as you know includes the chairmen of the TSBs, welcomes the House of Lords judgments. They clear the way for the re-organisation and flotation of the TSB Group, which will facilitate:—
- —the development of better services for all our customers;
- —the further growth of the Group as a major competitive force in the financial services sector;
- —and the establishment of a share ownership of over 1 million customers, staff and members of the public.
2. The TSB Act 1985 provides the key to these developments through the vesting of the Group's businesses in successor companies as the precursor of public flotation. From the vesting day the TSB Group's banking operations will be conducted on the same statutory footing as those of other banks.
3. Arrangements have been made to obtain with effect from 21st July 1986 the banking and other authorisations which TSB Scotland plc, TSB Northern Ireland plc and TSB Channel Islands Ltd will require, and to continue the Banking Act recognition of Central Trusteee Savings Bank Ltd which will on vesting day become TSB England & Wales plc.
4. Under the 1985 Act the vesting day is to be appointed by the Treasury after consulting the TSB Central Board. You have now asked formally for the Board's views. The Board's wish is that the Treasury should appoint 21st July 1986 as the vesting day. On that day the whole of the assets and liabilities of each of the four banks will be transferred to its successor banking company.
5. In your letter you ask where matters stand regarding the Board's undertakings and intentions related to the reorganization and flotation, which are stated in my letters of 6th December 1984 (reproduced in the White Paper) and 16th May 1985 (reproduced in Hansard. 4th July 1985, cols 261-2 WA).
6. In line with the Board's undertakings, I am pleased to confirm that the four TSB charitable foundations have been established and before vesting day TSB Group plc will execute deeds of covenant in their favour to the aggregate annual value of 1 per cent of the Group's profits, to become operative from the offer for sale of the Group's shares. The special shares in the banking companies in the UK conferring on the relevant foundation the right to appoint two of the respective bank's directors will be issued before the vesting day. At the time of flotation and in line with our undertakings, the foundations will receive free of consideration limited voting shares in TSB Group plc representing 5 per cent of its issued share capital, divided in proportion to the accumulated reserves of each of the four banks and convertible into ordinary shares in the event that the covenants expire or are renewed on terms less favourable to the foundations. The individual foundations will continue the TSBs' traditional role in contributing to the life of the community by assisting local needs of many different kinds.
7. We remain firmly set on achieving, with the help of our financial advisers, our target of over one million shareholders. A substantial proportion of the shares remaining after the allocation of 5 per cent to the four foundations will be reserved for staff and for those customers who had an account with one of the four TSBs on 17th December 1984 and who have maintained such account until the time of the offer for sale. As regards the balance of shares we shall seek to attract as many small investors as possible.
8. The Group intends to maintain its strong traditions in personal banking while developing as a financial services group to the benefit of all our customers. The rights of TSB staff and pensioners will be preserved.
9. The head office of each of the four banks will remain in the country in which it is registered. Each bank will continue to function as an independently managed bank within the Group. The Group's 766WA own registered office and annual general meetings will be in Scotland.
10. In addition to the undertakings which the Board gave, I expressed in my letters of 6th December 1984 and 16th May 1985 the Board's intentions on a range of detailed matters, which are mainly points for the memoranda and articles of association of the various Group companies and the TSB foundations. These have been finalised and I am making available copies of all the proposed memoranda and articles, and the agreements between TSB Group plc and the banking companies on dividend policy and the maintenance of net worth, to be deposited in the Libraries of the Houses of Parliament.
11. Pending flotation, TSB Group plc and the banking companies will be controlled by the Central Board, and you have the Board's assurance that no changes will be made which depart from the undertakings stated in my letters of 6th December 1984 and 16th May 1985.