Ratio Decidendi
A bank has a valid charge over a customer's deposits with the bank itself as security for the customer's liabilities. This is not inconsistent with the principle that a person cannot owe a debt to themselves.
Facts
BCCI had taken charges over its own customers' deposits as security for loans. On BCCI's insolvency, the liquidators challenged these charges.
Judgment Summary
The House of Lords upheld the charges. A bank can take a charge over its own customer's credit balance to secure the customer's liabilities. The charge operates as a flawed asset arrangement.
Key Quotes
"A charge by a customer over his own credit balance is conceptually possible and commercially convenient."
— Lord Hoffmann
Subsequent Treatment
Applied
Applied in subsequent banking security cases.