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| Version 1 | Version 2 |
|---|---|
| Plans for quicker bank bail-outs | Plans for quicker bank bail-outs |
| (about 18 hours later) | |
| New measures to rescue insolvent banks quickly have been floated by the government following the recent run on the Northern Rock bank. | New measures to rescue insolvent banks quickly have been floated by the government following the recent run on the Northern Rock bank. |
| The Treasury has suggested ensuring quicker payouts than those likely under the existing savers' protection scheme. | The Treasury has suggested ensuring quicker payouts than those likely under the existing savers' protection scheme. |
| Another idea is to raise further the savings sum guaranteed, up from the recently agreed new level of £35,000. | Another idea is to raise further the savings sum guaranteed, up from the recently agreed new level of £35,000. |
| Chancellor Alistair Darling told the Commons that he wanted to protect savers money if their bank failed. | Chancellor Alistair Darling told the Commons that he wanted to protect savers money if their bank failed. |
| "This regime would mean depositors are insulated from a bank that has failed, greater compensation for them and certainty their compensation can be paid out quickly," he told MPs. | "This regime would mean depositors are insulated from a bank that has failed, greater compensation for them and certainty their compensation can be paid out quickly," he told MPs. |
| Mr Darling declared a member's interest - that he had a Northern Rock mortgage - before making his statement on the Northern Rock crisis. | Mr Darling declared a member's interest - that he had a Northern Rock mortgage - before making his statement on the Northern Rock crisis. |
| Unless there are robust mechanisms to shore up depositor confidence, the risk of instability can be exacerbated Treasury discussion paper Cost of protecting our savings | Unless there are robust mechanisms to shore up depositor confidence, the risk of instability can be exacerbated Treasury discussion paper Cost of protecting our savings |
| The Treasury, Bank of England and Financial Services Authority (FSA) have started formal consultation on ways to improve the UK's system of protection for savers if their bank goes bust. | The Treasury, Bank of England and Financial Services Authority (FSA) have started formal consultation on ways to improve the UK's system of protection for savers if their bank goes bust. |
| At the start of the month, the chancellor raised from £2,000 to £35,000 the amount of money a saver would get back in full if their bank collapsed. | |
| It is clear that the authorities are particularly worried that the recent crisis at the Northern Rock bank could have spilled over into other sections of the financial services industry. | It is clear that the authorities are particularly worried that the recent crisis at the Northern Rock bank could have spilled over into other sections of the financial services industry. |
| "Recent events have demonstrated the importance of depositor confidence if institutions are to weather periods of financial instability," said the official discussion paper. | "Recent events have demonstrated the importance of depositor confidence if institutions are to weather periods of financial instability," said the official discussion paper. |
| "Unless there are robust mechanisms to shore up depositor confidence, the risk of instability can be exacerbated," it added. | "Unless there are robust mechanisms to shore up depositor confidence, the risk of instability can be exacerbated," it added. |
| Special administration | Special administration |
| One idea floated by the government in its document is that a new system of administration should be set up just for insolvent banks. | One idea floated by the government in its document is that a new system of administration should be set up just for insolvent banks. |
| That would mean an administrator could be appointed under special rules to sort out a bank's problems more quickly than would be likely under the present insolvency laws. | That would mean an administrator could be appointed under special rules to sort out a bank's problems more quickly than would be likely under the present insolvency laws. |
| At the moment, if a bank in the UK went bust, savers might find their money frozen for weeks or even months while insolvency experts tried to rescue it. | At the moment, if a bank in the UK went bust, savers might find their money frozen for weeks or even months while insolvency experts tried to rescue it. |
| Adoption of the US insurance system to protect savers' money seems unlikely. | Adoption of the US insurance system to protect savers' money seems unlikely. |
| That would involve the establishment of a very large insurance fund which might not be used for a very long time. | That would involve the establishment of a very large insurance fund which might not be used for a very long time. |
| However, the Financial Services Authority is already planning to beef up the existing UK Financial Services Compensation Scheme (FSCS) so that it has a capacity of just over £4bn. | However, the Financial Services Authority is already planning to beef up the existing UK Financial Services Compensation Scheme (FSCS) so that it has a capacity of just over £4bn. |
| The government suggests that a special form of administration for insolvent banks might also help maintain "critical banking functions" for customers, such as direct debits and the use of cash machines, while a bank is being rescued. | The government suggests that a special form of administration for insolvent banks might also help maintain "critical banking functions" for customers, such as direct debits and the use of cash machines, while a bank is being rescued. |