Financial Services (Banking Reform) Act 2013

Commentary

Part 7 – Miscellaneous

Bank of England

Section 137: Accounts of Bank of England and its wholly-owned subsidiaries

317.Section 137 amends the Bank of England Act 1998 (“the 1998 Act”).

318.The Bank of England is established by Royal Charter and so is not subject to the Companies Act 2006 (“the 2006 Act”). However section 7 of the 1998 Act provides that in preparing its accounts the Bank is subject to provisions corresponding to the requirements placed on directors of a banking company under the 2006 Act (in the 1998 Act called the “relevant Companies Act requirements”). Currently section 7(4) of the 1998 Act provides that the Bank may disregard a requirement to the extent it considers it appropriate, having regard to its functions. The amendments made by section 137(2) of the Act will mean that the Bank may only disregard a requirement where it considers it necessary to do so having regard to its financial stability objective under section 2A of the 1998 Act.

319.Subsection (3) inserts new section 7A of the 1998 Act. This makes provision similar to that made in section 7 in relation to certain wholly-owned subsidiaries of the Bank of England. Subsection (1) of new section 7A enables the Bank, by direction to a “qualifying company”, to exclude the application to that company of any of the relevant Companies Act requirements. Such a direction may only be given where the Bank considers it necessary to do so, having regard to the Bank’s financial stability objective. “Qualifying company” is defined by subsection (9) as a company which is wholly-owned by the Bank, other than the PRA or a company which is a bridge bank for the purposes of section 12(3) of the Banking Act 2009. “Relevant Companies Act requirements” is defined in subsection (2).

320.Subsections (4) to (7) of new section 7A of the 1998 Act relate to the role of the Treasury. Subsection (4) requires the Bank to consult the Treasury before giving a direction under subsection (1). Subsection (5) enables the Treasury, by notice in writing, to require the Bank to publish information about the accounts of a qualifying company. Subsection (6) makes it clear that such information may include information which, as a result of a direction issued by the Bank under subsection (1), was not included in the accounts of the qualifying company. The Treasury must consult the Bank before giving such a notice.