The Building Societies (Accounts and Related Provisions) Regulations 1992

PART III PROVISIONS APPLICABLE TO PARTS I AND II

1.  The heading “Shares and Deposits” in the balance sheet in Part I of this Schedule may instead be expressed as “Shares, Deposits and Loans” and if it is so expressed—

(a) the corresponding heading in the balance sheet in Part II shall be similarly expressed, and

(b) in the balance sheet in Parts I and II the expression “Other deposits” shall be replaced by the expression “Other deposits and loans”.

2.—(1) In respect of any asset or liability item, the following shall be shown either by subdivision of the relevant items or by way of notes to the accounts—

(a) in the case of such items in Part I, claims on, or liabilities to, subsidiary undertakings;

(b) in the case of such items in both Parts I and II, claims on, or liabilities to, any associated body in which the society has a participating interest; and

(c) in the case of such items in both Parts I and II, claims on, or liabilities to, any associated body other than a subsidiary undertaking or a body in which the society has a participating interest.

(2) The amount of any assets that are subordinated must be shown either as a subdivision of any relevant asset item or in the notes to the accounts; in the latter case disclosure shall be by reference to the relevant asset item or items in which the assets are included.

(3) The amounts required to be shown in respect of subparagraphs (1)(a) and (b) shall be further subdivided to show the amounts of any assets or liabilities which are subordinated.

(4) For the purposes of subparagraphs (2) and (3), assets or liabilities are subordinated if there is a contractual obligation to the effect that in the event of winding up or bankruptcy they are to be repaid only after the claims of other creditors have been met (other than any creditors ranking pari passu with those liabilities) whether or not a ranking has been agreed between the subordinated creditors concerned.

3.—(1) This paragraph applies to Asset item 1 of Parts I and II of this Schedule.

(2) There shall be included in Asset item 1(a)—

(a) banknotes or coinage of any country or territory;

(b) deposits with the Bank of England which may be withdrawn without notice; all other claims on the Bank of England or the Central Banks of other member States of the European Community, Canada, Japan, Sweden, Switzerland and the United States of America shall be included in item 1(c).

(3) There shall be included in Asset item 1(b)(i) Treasury bills and similar debt instruments issued by public bodies which are eligible for refinancing with the Bank of England. Any Treasury bills or similar debt instruments not so eligible shall be included under Asset item 1(b)(ii).

(4) There shall be included in Asset item 1(b)(ii) all bills held as liquid assets that have been purchased to the extent that they are eligible for refinancing with the Bank of England.

(5) There shall be included in Asset item 1(c) all deposits with, but excluding any debt securities issued or guaranteed by, any credit institution authorised by the competent authorities of a Member State of the European Community.

(6). (a) Asset item 1(d) shall comprise transferable debt securities issued or guaranteed by any credit institution authorised by the competent authorities of a Member State of the European Community, or by other undertakings or public bodies.

(b) Debt securities issued by public bodies shall however, only be included in this item if they may not be shown under Asset item 1(b).

(c) Where a society holds its own debt securities these shall not be included under this item but shall be deducted from the appropriate liabilities item.

(d) Securities bearing interest rates that vary in accordance with specific factors, for example the interest rate on the inter-bank market or on the Euromarket, shall also be regarded as debt securities to be included under this item.

(7) There shall be included in Asset item 1(d)(i) any asset which represents a liability of, or comprises a debt security issued by any of the following—

(a) the Governments of European Community Member States, Canada, Japan, Sweden, Switzerland or the United States of America;

(b) issuers whose obligations as to payment are fully guaranteed by any of the governments listed in sub-paragraph (i);

(c) relevant authorities;

(d) intergovernmental investment or development institutions whose capital is subscribed by European Community Member States and other states;

(e) any other body exercising a statutory function within European Community Member States, Canada, Japan, Sweden, Switzerland and the United States of America.

(8) Any transferable debt security which comprises a security issued by a nationalised industry or otherwise does not fall to be included in Asset item 1(d)(i) shall be included in Asset item 1(d)(ii).

(9) For the purposes of this paragraph—

• “deposit” means a sum of money paid on terms—

  (a)

  under which it will be repaid, with or without interest or a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; and

  (b)

  which are not referable to the provision of property or services or the giving of security; and,

  for the purposes of this definition, money is paid on terms which are referable to the provision of property or services or to the giving of security if, and only if—

  (i)

  it is paid by way of advance or part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services is not or are not in fact sold, hired or otherwise provided;

  (ii)

  it is paid by way of security for the performance of a contract or by way of security in respect of loss which may result from the non performance of a contract; or

  (iii)

  without prejudice to paragraph (ii) above, it is paid by way of security for the delivery up or return of any property, whether in a particular state of repair or otherwise.

• “local authority” means any of the following authorities:

  (a)

  in England and Wales, a county council, a district council, a London borough council, a parish or community council, the common Council of the City of London, and the Council of the Isles of Scilly;

  (b)

  in Scotland, a local authority within the meaning of section 235 of the Local Government (Scotland) Act 1973(1);

  (c)

  in Northern Ireland, a district council within the meaning of section 1 of the Local Government Act (Northern Ireland) 1972(2);

• “relevant authority” means any of the following:

  (a)

  a local authority;

  (b)

  any authority all the members of which are appointed or elected by one or more local authorities;

  (c)

  any authority the majority of the members of which are appointed or elected by one or more local authorities in the United Kingdom, being an authority which by virtue of any enactment has power to issue a precept to a local authority in England and Wales, or a requisition to a local authority in Scotland, or to the expense of which, by virtue of any enactment, a local authority in the United Kingdom is or can be required to contribute;

  (d)

  the Receiver for the Metropolitan Police District or a combined police authority (within the meaning of the Police Act 1964(3));

  (e)

  a residuary body within the meaning of section 105(1) of the Local Government Act 1985(4);

  (f)

  a passenger transport executive within the meaning of section 9(1) of the Transport Act 1968(5);

• “Treasury bills” means bills issued by Her Majesty’s Government in the United Kingdom and Northern Ireland Treasury Bills.

4.  In Asset items 2 and 3 in Parts I and II of this Schedule the expression “ADVANCES SECURED ON RESIDENTIAL PROPERTY” shall correspond to advances which are Class I advances, and the expression “OTHER ADVANCES SECURED ON LAND” to advances which are Class 2 advances, for the purpose of the requirements of Part III (advances, loans and other assets) of the Act for the structure of commercial assets.

5.  Within Asset item 4 of Parts I and II of this Schedule—

(a) in item 4(a) there shall be included mobile home loans,

(b) in item 4(b) there shall be included loans to which section 16 (power to lend to individuals) of the Act applies, facility debts (as defined in article 3(2) of the Building Societies (Limited Credit Facilities) Order 1987)(6), bridging debts (as defined in Part IV of Schedule I to the Building Societies (Commercial Assets and Services) Order 1988)(7) and money transmission service debts (as defined in article 3(2) of the Building Societies (Money Transmission Services) Order 1989)(8), and which do not fall to be included in item 4(c),

(c) in item 4(c) there shall be included residual mortgage debts (as defined in Part I of Schedule 1 to the Building Societies (Commercial Assets and Services) Order 1988), leasable chattels (as defined in Part III of Schedule 1 to that Order) and loans or debts which would otherwise fall to be included in item 4(b) in accordance with subparagraph (b) but for the fact that the loan or debt is on any security, whether that security be partial or full and whether it comprises property or a guarantee,

(d) in item 4(d) there shall be included all property to which section 17 of the Act (power to hold and develop land), other than section 17(6), applies,

and each subdivision of that Asset item shall in Part II also apply to any asset which arises from the activity of a subsidiary undertaking and would, were that subsidiary undertaking the society, be an asset to which that subdivision would apply.

6.  Mortgage finance rights (as defined in Part II of Schedule 1 to the Building Societies (Commercial Assets and Services) Order 1988)(9) may be included in either of Asset items 1(d) or 4(c).

7.  Premises to which section 17(6) of the Act applies (and premises of a subsidiary undertaking which would, were they premises of a society, be premises to which that provision would apply) shall be included in Asset item 6(a) (and not Asset item 4(f)) in Part I of this Schedule, and in Asset item 7(a) (and not in Asset item 4(f)) in Part II of this Schedule).

8.—(a) Asset item 5 in Part I and Asset item 6 in Part II of this Schedule shall comprise—

(i) development costs,

(ii) concessions, patents, licences, trade marks and similar rights and assets,

(iii) goodwill, and

(iv) payments on account relating to intangible fixed assets.

(b) Amounts shall be included in respect of the assets mentioned in subparagraph (a)(ii) only if they were acquired for valuable consideration or if they were created by the society or by a subsidiary undertaking.

(c) Amounts representing goodwill shall be included only to the extent that the goodwill was acquired for valuable consideration.

(d) There shall be disclosed, in a note to the accounts the amount of any goodwill included in Asset item 5 in Part I and Asset item 6 of Part II of this Schedule.

9.  Asset item 8 in Part I and Asset item 9 in Part II of this Schedule shall include any expenditure incurred during the financial year but relating to a subsequent financial year, together with any income which, although relating to the financial year in question, is not due until after its expiry, except that they shall not include accrued interest in respect of Asset items 1 to 4 in Parts I and II, and asset item 5(a) in Part II of this Schedule, which accrued interest shall be included under those items.

10.—(1) Subject to paragraph 13 all liabilities of a subsidiary undertaking of a society in respect of deposits shall be included in Liability item 12 of Part II where they would, were they liabilities of the society, be classifiable as non-retail funds and deposits, and any other such liabilities of the subsidiary undertaking shall be included in Liability item 11 thereof.

(2) Any liabilities of a subsidiary undertaking of a society in respect of shares, where included in the balance sheet in Part II, shall be included in Liability item 20 thereof.

11.—(1) In Liability items 11 of Part I and 12 of Part II of this Schedule—

(a) in “Amounts owed to credit institutions” there shall be included liabilities to which subsection (4)(bb) of section 7 of the Act(10) applies (or, where in Part II the liability is that of a subsidiary undertaking, would apply were that subsidiary undertaking the society);

(b) in “Debt securities in issue” there shall be included liabilities to which subsection (4)(a) and (aa) of that section applies (or, where in Part II the liability is that of a subsidiary undertaking, would apply were that subsidiary undertaking the society).

(2) For the purpose of those Liability items—

(a) “certificate of deposit” means a certificate relating to money deposited with the issuer which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable;

(b) “floating rate note” means a note which embodies a right, transferable to any person by delivery or by a method specified in the note, to receive a principal sum and interest at a rate which is variable at times specified in the note;

(c) “fixed rate note” means a note which embodies a right, transferable to any person by delivery or by a method specified in the note, to receive a principal sum and interest at a rate which is fixed as specified in the note.

12.  Liability item 13 in Part I and Liability item 14 in Part II of this Schedule shall include any income relating to a subsequent financial year, together with any charges which although relating to the financial year in question, will be payable only in the course of a subsequent financial year, except that they shall not include accrued interest in respect of Liability items 10 and 11 in Part I and Liability items 11 and 12 in Part II, which accrued interest shall be included under those items.

13.—(1) Liability item 15 in Part I and Liability item 16 in Part II of this schedule shall comprise all liabilities in respect of which there is a contractual obligation that, in the event of winding up or bankruptcy, they are to be repaid only after the claims of other creditors have been met. All subordinated liabilities shall be included, whether or not a ranking has been agreed between the subordinated creditors concerned.

(2) Any subordinated loan capital of the society shall be included in Liability item 15 in Part I and Liability item 16 in Part II of this Schedule and in no other such Liability item, but this requirement shall not be taken to exclude the obligation to include in Liability item 16 in Part II subordinated liabilities of subsidiary undertakings.

14.  Liability item 16(a) in Part I and Liability item 17(a) in Part II of this Schedule shall include any deferred shares which may be aggregated with reserves for the purposes of the first criterion of section 45(3) of the Act under the Building Societies (Designated Capital Resources) (Deferred Shares) Order 1989(11).

15.  Liability item 16(b) in Part I and Liability item 17(b) in Part II of this Schedule shall include any permanent interest bearing shares which may be aggregated with reserves for the purposes of the first criterion of section 45(3) of the Act under the Building Societies (Designated Capital Resources) (Permanent Interest Bearing Shares) Order 1991(12).

16.  Memorandum item 20 in Part I and Memorandum item 22 in Part II of this Schedule shall include all transactions whereby the society (or the society and its subsidiary undertakings in respect of Part II) has underwritten the obligations of a third party.

17.  Memorandum item 20(a) in Part I and Memorandum item 22(a) in Part II of this Schedule shall include all guarantee obligations incurred and assets pledged as collateral on behalf of third parties by the society (or the society and its subsidiary undertakings in respect of Part II).

18.  Memorandum item 21 in Part I and Memorandum item 23 in Part II of this Schedule shall include every irrevocable commitment which would give rise to a credit risk to the society (or the society and its subsidiary undertakings in respect of Part II).

19.—(1) The following rules apply where a society (or the society and its subsidiary undertakings in respect of Part II) is a party to a sale and repurchase transaction.

(2) Where the society is the transferor of the assets under the transaction—

(a) the assets transferred shall, notwithstanding the transfer, be included in its balance sheet;

(b) the purchase price received by it shall be included in its balance sheet as appropriate as an amount owed to the transferee; and

(c) the value of the assets transferred shall be disclosed in a note to its accounts.

(3) Where the society is the transferee of the assets under the transaction it shall not include the assets transferred in its balance sheet but the purchase price paid by it to the transferor shall be so included as an amount owed by the transferor.

20.—(1) For the purpose of this paragraph “managed funds” are funds which the society (or the society and its subsidiary undertakings in respect of Part II) administers in its own name but on behalf of others and to which it has legal title.

(2) Where claims and obligations arising in respect of managed funds fall to be treated as claims and obligations of the society (or the society and its subsidiary undertakings in the case of Part II) such claims and obligations representing managed funds may be included in the balance sheet, with notes to the accounts disclosing the total amount included with respect to such assets and liabilities in the balance sheet and showing the amount included under each relevant balance sheet item in respect of such assets or (as the case may be) liabilities.

21.—(1) Where a society (or the society and its subsidiary undertaking in the case of Part II) is a party to a syndicated loan transaction, it shall include in the balance sheet only that part of the total loan which it has funded itself.

(2) Where a society (or the society and its subsidiary undertakings in the case of Part II) is a party to a syndicated loan transaction and has agreed to reimburse (in whole or in part) any other party to the syndicate any funds advanced by that party or any interest thereon upon the occurrence of any event including the default of the borrower, any additional liability by reason of such a guarantee shall be included as a contingent liability in Memorandum item 20(a) in Part I or 22(a) of Part II of this Schedule.

(1)

1973 c. 65.

(2)

1972 c. 9. (NI)

(3)

1964 c. 48.

(4)

1985 c. 51.

(5)

1968 c. 73.

(6)

S.I. 1987/1975.

(7)

S.I. 1988/1141.

(8)

S.I. 1989/730.

(9)

S.I. 1988/1141.

(10)

Section 7 of the Building Societies Act 1986 has been amended by SI 1987/378, 1670 and SI 1990/2363.

(11)

S.I. 1989/208. This Order was revoked by S.I. 1991/702 but the right of certain shares to be aggregated was retained by Article 3 of the revoking Order.

(12)

S.I. 1991/702.