Commons Sense

House of Commons · General Debate

Bank Resolution (Recapitalisation) Bill [Lords] 2025-04-24

24 April 2025 · 9 other contributors

Opened by Mark Garnier Con Wyre Forest

Economy

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Mark Garnier raised concerns about bank resolution (recapitalisation) bill [lords] 2025-04-24 in the House of Commons. A government minister responded. Other MPs also contributed.

Key points

  • The Bill aims to equip the Bank of England with necessary tools to manage bank failures, minimising risk to taxpayers and UK financial stability.
  • Credit unions are not within the scope of the resolution regime, as explained by the Minister.
  • The mechanism in the Bill activates when four specific conditions are met, focusing on protecting depositors and financial stability quickly and efficiently.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Mark Garnier Con Wyre Forest

The Opposition welcome the Government’s decision to carry over the legislation from the previous Parliament, and that the principles underpinning the Bill continue to enjoy strong cross-party support. We all want and need confidence in our banking sector, yet the failure of Silicon Valley Bank UK exposed a gap in our resolution framework for smaller banks. The Bill remains both prudent and necessary to protect financial stability and public funds. New clause 3 seeks clarity on how the resolution framework can be adapted to protect credit unions as their importance has grown.

Other contributors (9)
  • Mark Garnier Con Wyre Forest

    The Bill excludes credit unions from its recapitalisation mechanism. While their smaller size and unique nature may differentiate them from banks, questions remain on how the current resolution regime accounts for credit union failures as the sector scales up. The amendment requires the Minister to produce a report outlining how the resolution framework can be adapted to protect credit unions, ensuring that their growth does not outstrip their regulatory safeguards.

  • Mark Garnier Con Wyre Forest

    He supports the overall aim of the Bill to strengthen the banking system. However, he raises concerns about specific amendments: amendment 1 is limited in scope and should be targeted at smaller banks; amendment 3 introduces impractical mechanisms that could hinder swift decision-making during crises; amendment 4 seeks to place a levy on the banking sector but may conflict with broader economic growth objectives.

  • David Pinto-Duschinsky Lab Hendon

    He opposes amendments 1, 3, and 4. Pinto-Duschinsky argues that these amendments could impede the effectiveness of the new resolution regime by hindering speed and flexibility needed during financial crises. He cites experiences from the global financial crisis to highlight the importance of swift actions in resolving bank failures.

  • David Pinto-Duschinsky Con Hendon

    Argues against amendments, stating the Bill is well-policed and circumscribed. He warns about potential crises where highly capitalised banks may suffer rapid deterioration due to mass redress events.

  • Clive Jones LD Wokingham

    Supports the Bill but brings back amendments from Committee stage, focusing on ensuring that only small and medium-sized banks are eligible for the new resolution mechanism. He believes this will protect consumers and the banking sector from unnecessary financial burdens.

  • Matt Rodda Lab Reading Central

    Asked for reassurance on bank branch closures if a bank collapse occurs, acknowledging the Bill's limited scope but expressing concern about consumer protections.

  • Gareth Snell Lab/Co-op Stoke-on-Trent Central

    Sought to intervene during Emma Reynolds' speech regarding Third Reading of the Bill.

  • Mark Garnier Con Wyre Forest

    Expressed concern about the tripartite regime during the 2008 financial crisis and highlighted the importance of resolving issues related to banking reform. He supports amendment 2, arguing that it ensures mutuals are considered when avoiding demutualisation.

  • Emma Reynolds Lab Hendon

    Stressed the necessity of strengthening UK’s bank resolution regime through providing more flexible tools for addressing banking institution failures. She emphasised the importance of protecting taxpayers and supporting economic growth, while acknowledging cross-party support for the Bill's objectives.

Government Response

Government Minister

The Bill aims to equip the Bank of England with necessary tools to manage bank failures minimising risk to taxpayers and UK financial stability. The Minister explains why credit unions are not in scope of the resolution regime, stressing that this is beneficial for the sector. The mechanism in the Bill is about what happens when the resolution regime is triggered, with four specific conditions needing to be met. The Government aims to protect depositors and financial stability quickly and efficiently, without adding unnecessary stages that could delay decision-making during a crisis.

Shadow Response

None

Congratulated the Minister on her work and expressed agreement on the overall objective of the Bill, albeit with some minor disagreements. Acknowledged the iterative process of banking regulation improvement and praised previous government officials for their handling of Silicon Valley Bank UK.

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