The UK government has pulled back guarantees on £400m worth of loans paid out by collapsed financier Greensill Capital to companies linked to steel magnate Sanjeev Gupta.
The withdrawal comes after the British Business Bank (BBB) – the UK’s state-owned development – in 2020 guaranteed £400m worth loans, given by Greensill, to companies owned by and linked to Gupta, as part the UK government’s Covid support packages, according to the Financial Times.
The UK government’s public accounts committee later said the £400m worth of loans paid out to companies linked to Gupta “flagrantly” contravened the £50m limit on loans given to a single group.
A spokesperson for the BBB said that under the government’s own rules, the guarantor “may terminate guarantees if the relevant loans do not comply with certain eligibility criteria and if the Lender does not act in accordance with a certain standard of care”.
The withdrawal of the BBB’s guarantees is set to push the cost of any losses onto other creditors, after the UK’s National Audit Office warned in 2021 that the loans could cost the British taxpayer £335m.
The news came as Credit Suisse told clients that its efforts to recover billions it lent to Greensill will cost the firm $291m (£243m).
The Swiss bank said it expects legal fees, advisory fees, and the cost of propping up the collapsed financier’s skeleton staff will cost more than twice its previous estimate of $145m, as the firm prepares for years of court battles and insurance disputes, according to the Financial Times.
Credit Suisse and Greensill’s administrators have been approached for comment.
The post UK government strips guarantees on £400m loans paid by Greensill Capital appeared first on CityAM.
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