Investment Banks

Greg Clark Excerpts

Tuesday 23rd April 2013 Written Statements

[The Financial Secretary to the Treasury (Greg Clark)]

HM Treasury is today laying before Parliament a copy of the report of Peter Bloxham’s review of the Investment Bank Special Administration Regulations 2011.

Those regulations, made under the Banking Act 2009, came into force on 8 February 2011. In accordance with section 236 of the Act, the Treasury arranged for a review of the effect of the regulations to be completed within two years of the date on which those regulations came into force. Mr Bloxham was appointed on 28 November 2012, and reported to the Treasury on 7 February 2013.

The Act requires a review of investment bank insolvency regulations to consider, in particular, how far the regulations are achieving the objectives specified for the special administration regime, and whether the regulations should continue to have effect. The specified objectives are:

identifying, protecting, and facilitating the return of client assets;

protecting creditors’ rights;

ensuring certainty for investment banks, creditors, clients, liquidators and administrators;

minimising the disruption of business and markets; and

maximising the efficiency and effectiveness of the financial services industry in the United Kingdom.

Mr Bloxham’s terms of reference set out a two-stage process. The first stage asked him to answer the statutory questions set out above in a report to Treasury. The second stage asks him to consider further possible changes to the special administration regime to improve its operation, as well as wider changes which might provide for a better administration process beyond the narrow bounds of the regime itself.

He concludes that the special administration regime does fulfil a useful purpose and should therefore be retained, but subject to amendment. His report goes on to make a number of recommendations for possible improvement.

The Treasury welcomes this report and accepts the conclusion that the investment firm special administration regime should be retained. The Treasury also accepts that amendments to that regime will be necessary if it is to be better able to fulfil the objectives set for it.

I have therefore asked Peter Bloxham to consider further possible changes to the regime, as recommended in his report. I expect him to report to the Treasury over the summer. The Treasury will also lay that report before Parliament and make a further statement.