Commentary on provisions of Act Section 7: Amendments to the Banking Act 2009
Subsection (1) states that the following subsections amend the Banking Act 2009.
	Subsection (2) amends section 3 (interpretation: other expressions) to exclude FSCS funds provided from the definition of extraordinary public financial support. This reflects that the new mechanism is intended to reduce risk to the kind of public funds described within this definition.
	Subsection (3) amends section 12AA (bail-in: sequence of write-down and conversion of capital instruments and liabilities) to allow the Bank to take into account the funds provided by the FSCS when they are calculating the extent to which certain liabilities are bailed-in when exercising the bail-in write-down tool. This is to ensure that the Bank is not required to writedown certain liabilities where this may negatively impact and destabilise the continued operation of the failed firm.
	Subsection (4) inserts new text into section 15 (share transfer instrument) to give the Bank an explicit power to require the issuance of securities by the firm in resolution where the FSCS has made a recapitalisation payment under new section 214E. This is intended to ensure that the Bank can move swiftly to ensure FSCS funds are able to recapitalise the failing firm in question.
	Subsection (5) amends section 57 (valuation principles) so that funds provided by the FSCS are disregarded for the purposes of the valuation used to determine compensation for transferors. This would avoid any assessment of the compensation payable to former shareholders and creditors including value that was contributed by the banking sector.
	Subsection (6) amends section 58 (resolution fund) so that funds provided by the FSCS are included in public financial assistance for the purpose of section 58(2). This means that funds would be able to be subtracted when calculating the proceeds of the sale used to determine compensation for transferors. This would avoid any assessment of the compensation payable to former shareholders and creditors including value that was contributed by the banking sector.
	Subsection (7) specifies that section 78A (pre-conditions for financial assistance: duty of Bank to give information), which places a duty on the Bank to provide information to the Treasury about the pre-conditions for financial assistance, will not apply where FSCS funds provided under section 214E have been used.