Banking Act 1987 (repealed)

[59 F1 Meaning of insolvency etc. U.K.

(1) For the purposes of this Part of this Act, a UK institution or participating non-EEA institution becomes insolvent—

(a) on the making by the Bank of a determination that, for reasons which directly relate to the institution’s financial circumstances, the institution—

(i) is unable to repay deposits which are due and payable; and

(ii) has no current prospect of being able to do so;

(b) on the making by a court in any part of the United Kingdom, or in another EEA State, or a judicial ruling which—

(i) directly relates to the institution’s financial circumstances; and

(ii) has the effect of suspending the ability of depositors to make claims against the institution; or

(c) in the case of a participating non-EEA institution, on the making by a court in any country or territory outside the European Economic Area of a judicial ruling which appears to the Board to correspond as nearly as may be to such a judicial ruling as is mentioned in paragraph (b) above,

but only if deposits made with the institution have become due and payable and have not been repaid.

(2) For those purposes, a participating EEA institution becomes insolvent—

(a) on the making by the supervisory authority in the institution’s home State of a declaration that deposits held by the institution are no longer available; or

(b) on the making by a court in any part of the United Kingdom, or in an EEA State other than the institution’s home State, of a judicial ruling which—

(i) directly relates to the institution’s financial circumstances; and

(ii) has the effect of suspending the ability of depositors to make claims against the institution,

but only if, in a case falling within paragraph (b) above, deposits made with the institution have become due and payable and have not been repaid.

(3) For those purposes—

(a) an institution which has become insolvent by virtue of such a determination or declaration as is mentioned in subsection (1)(a) or (2)(a) above ceases to be insolvent on any withdrawal of the determination or declaration; and

(b) an institution which has become insolvent by virtue of such a judicial ruling as is mentioned in subsection (1)(b) or (c) or (2)(b) above ceases to be insolvent on any reversal of the ruling (whether on appeal or otherwise).

(4) In relation to a UK institution or participating non-EEA institution, it shall be the duty of the Bank—

(a) to make such a determination as is mentioned in subsection (1)(a) above within 21 days of its being satisfied as there mentioned; and

(b) to withdraw such a determination within 21 days of its ceasing to be so satisfied.

(5) In this section—

(a) any reference to a UK institution includes references to a former UK institution, and to a former authorised institution which is incorporated in or formed under the law of any part of the United Kingdom;

(b) any reference to a participating EEA institution includes references to a former participating EEA institution, and to a former authorised institution which is incorporated in or formed under the law of an EEA State other than the United Kingdom; and

(c) any reference to a participating non-EEA institution includes references to a former participating non-EEA institution, and to a former authorised institution which is incorporated in or formed under the law of a country or territory which is outside the European Economic Area.]

Textual Amendments

F1 S. 59 substituted (1.7.1995) by S.I. 1995/1442, regs. 31, 53(1), 54(2)

Modifications etc. (not altering text)

C1 S. 59: power to amend conferred (9.6.1997) by 1997 c. 32, s. 32(5)(b)(i); S.I. 1997/1427, art. 2(g).

C2 S. 59(4)(a) modified (1.7.1995) by S.I. 1995/1442, regs. 53(3), 54(2)