The Building Societies (Liquid Asset) Regulations 1987

• Citation: S.I. 1987/1499
• Sections: 40

Section 1 Citation and commencement

These Regulations may be cited as the Building Societies (Liquid Asset) Regulations 1987 and shall come into force on 1st October 1987.

Section 2 Interpretation

In these Regulations—

“ the Act ” means the Building Societies Act 1986;

“liquid asset” means an asset of a character which societies may hold under section 21 (liquid assets) of the Act for the purpose of meeting their liabilities as they arise;

“predecessor” means, in relation to an existing society—

a society which has transferred its engagements to that existing society, or

a society which—

has amalgamated with one or more societies under section 93 of the Act (amalgamations) so as to establish that existing society as their successor, or

has united with one or more societies under section 18 (unions) of the Building Societies Act 1962 or of the Building Societies Act (Northern Ireland) 1967 so as to become that existing society; and

“society” means a building society.

Section 3 Prescription of liquid assets

(1) Each description of assets which—

(a) comes within a provision of Part I of the Schedule hereto, and

(b) where a provision of Part II of the Schedule hereto applies to it, conforms with the requirements of that provision,

is prescribed as a description of liquid assets.

(2) Part III of the Schedule hereto has effect for determining the circumstances in which, and the conditions subject to which, the descriptions of assets referred to therein may be held by societies.

(3) The definitions in Part IV of the Schedule hereto have effect in respect of the interpretation of that Schedule.

Section 4 Transitional provision

(1) This regulation applies to assets of a society which are not liquid assets under these Regulations but—

(a) are assets which—

(i) were previously liquid assets and have ceased to be so, and

(ii) have been held by the society continuously since a date before the date on which they ceased to be liquid assets, or

(b) are assets which—

(i) were treated, by virtue of article 7 (liquid assets) of the Building Societies Act 1986 (Rules and Miscellaneous Transitional Provisions) Order 1986 , as if they were prescribed in liquid asset Regulations, and

(ii) have been held by the society continuously since a date before the date on which these Regulations came into force.

(2) A society which so holds assets to which this regulation applies shall not lose its power to continue to hold those assets.

(3) In this regulation a society is treated as including any predecessor of the society.

Section 1

Cash.

Section 1

An asset which comes within any paragraph other than paragraph 1 of Part I above is a liquid asset only where any obligation of the person whose liability that asset represents to make any payment in respect thereof is expressed in sterling.

Section 1

A liquid asset issued by a society which comes within paragraph 18 or 25 of Part I above may be held only where, immediately following its acquisition, the aggregate of values of liquid assets within those paragraphs so held did not exceed 2.5 per cent of the amount of the total assets of the holding society in its latest balance sheet laid before it at an annual general meeting.

Section 2

Deposits with the Bank of England.

Section 2

Loan stock which comes within paragraph 9 of Part I above is a liquid asset only where it comprises a marketable security.

Section 2

For the purpose of paragraph 1 above—

(a) where the engagements of a predecessor have been transferred to a society after the end of the financial year of the society to which a balance sheet referred to in that paragraph relates, the total assets of the society shall be treated as increased by the amount of the total assets of the predecessor in the latest balance sheet laid before the predecessor at an annual general meeting, and

(b) where there is no latest balance sheet of a society to which paragraph 1 above relates and the society has predecessors, the aggregate of the total assets of those predecessors in the latest respective balance sheets laid before them at their respective annual general meetings shall be treated as the total assets of the society to which paragraph 1 above relates.

Section 3

Certificates of Tax Deposit issued by the Treasury.

Section 3

A loan which comes within paragraph 10 of Part I above is a liquid asset only where it is secured by a charge on the Consolidated Fund of Northern Ireland.

Section 4

Treasury Bills.

Section 4

A deposit or loan which comes within paragraph 10, 13 or 23 of Part I above is a liquid asset only during the period of five years ending with the relevant date (that is to say the date on which it falls to be repaid in full or, if earlier, the date on which the depositor or lender can require it to be repaid in full without the performance of any obligation on his part other than the service of ordinary repayment notice or the acknowledgement of receipt of the sum so paid).

Section 5

Marketable securities issued in the United Kingdom by Her Majesty’s Government.

Section 5

A deposit which comes within paragraph 15 or 16 of Part I above is a liquid asset only where it is secured by the transfer to the society of a liquid asset which comes within paragraph 5, 11 or 12 thereof.

Section 6

National Savings Deposit Bonds.

Section 6

A stock lending right against a Stock Exchange money broker which comes within paragraph 17 of Part I above is a liquid asset only where—

(a) that right—

(i) arises on the transfer by the society to the Stock Exchange money broker of a liquid asset which comes within paragraph 5 of Part I above, and

(ii) consists of a right to receive, or to call for the transfer to some other person of, a marketable security from the Stock Exchange money broker being a marketable security of the same issue and amount as the liquid asset so transferred,

(b) the transfer referred to in subparagraph (a)(i) above is effected through the CGO Service, and

(c) no asset other than a liquid asset specified in Part I above falls to be transferred to the society as security for the performance of the obligation of the Stock Exchange money broker under subparagraph (a)(ii) above.

Section 7

National Savings Income Bonds.

Section 7

(1) An asset issued by a society which comes within paragraph 18 or 25 of Part I above is a liquid asset only where the total assets of the issuing society in its latest balance sheet laid before it at an annual general meeting amounted to no less than £1,000 million.

(2) For the purpose of subparagraph (1) above—

(a) where the engagements of a predecessor have been transferred to a society after the end of the financial year of the society to which a balance sheet referred to in that subparagraph relates, the total assets of the society shall be treated as increased by the amount of the total assets of the predecessor in the latest balance sheet laid before the predecessor at an annual general meeting, and

(b) where there is no latest balance sheet of a society to which subparagraph (1) above relates and the society has predecessors, the aggregate of the total assets of those predecessors in the latest respective balance sheets laid before them at their respective annual general meetings shall be treated as the total assets of the society to which subparagraph (1) above relates.

Section 8

Deposits with the National Savings Bank.

Section 8

A loan which comes within paragraph 23 of Part I above is a liquid asset only where—

(a) it is secured by a charge on revenues of the relevant authority or on a fund into which such revenues are payable, or

(b) it is made on the giving of—

(i) a receipt for the loan by the Treasurer or other similar officer of the relevant authority, and

(ii) an undertaking by the relevant authority that, if requested to charge the loan on revenues of the authority or on a fund into which such revenues are payable, it will either comply with the request or repay the loan.

Section 9

Loan stock of the Bank of Ireland.

Section 9

A floating rate note which comes within paragraph 24 or 25 of Part I above is a liquid asset only where its terms do not provide that the right to receive any payment under it is, on the liquidation of its issuer, postponed to the rights of any class of persons specified or referred to in the floating rate note.

Section 10

Loans to the Department of Finance and Personnel (Northern Ireland).

Section 11

Marketable securities issued in the United Kingdom in respect of which the obligations of the issuer as to payment are guaranteed by Her Majesty’s Government.

Section 12

Marketable securities issued in the United Kingdom by any of the following:

(a) the African Development Bank;

(b) the Asian Development Bank;

(c) the Caribbean Development Bank;

(d) the European Atomic Energy Community;

(e) the European Coal and Steel Community;

(f) the European Economic Community;

(g) the European Investment Bank;

(h) the Inter-American Development Bank;

(i) the International Bank for Reconstruction and Development;

(j) the International Finance Corporation;

(k) the International Monetary Fund.

Section 13

Deposits with any Banking Act authorised institution.

Section 14

Certificates of deposit issued by any Banking Act authorised institution.

Section 15

Deposits with any gilt-edged market maker.

Section 16

Deposits with any Stock Exchange money broker.

Section 17

Stock lending rights against any Stock Exchange money broker.

Section 18

Certificates of deposit issued by any society.

Section 19

Bills accepted by any eligible bank.

Section 20

Bills issued by any relevant authority.

Section 21

Marketable securities issued in the United Kingdom by any relevant authority.

Section 22

Marketable securities issued in the United Kingdom by any nationalised industry.

Section 23

Loans to any relevant authority.

Section 24

Floating rate notes issued by any Banking Act authorised institution.

Section 25

Floating rate notes issued by any society.