Member

There is a potential solution, which the noble Baroness, Lady Noakes, referred to in the first group. In a sense, we have gone full circle. When a failing institution is transferred to a bridge bank, the default position should be that only the assets and the business of the bank—along with only very clearly defined liabilities, such as the protected deposits—are transferred to the bridge bank, and not the equity of the failing institution. That would define and limit the creditors that could be repaid out of the FSCS money in my example, and would make it much more likely that some money in that example might be recouped for the FSCS. A transfer of the equity of a failing institution into a bridge bank should happen only if there are very clear and exceptional reasons for doing so, with the implications for the FSCS of doing so being very clearly recognised.