Government drops guarantees from £400m on Greensill loans

The removal of guarantees on £400m worth of loans from the financier was paid to companies linked to steel magnate Sanjeev Gupta. 

According to the Financial Times, the British Business Bank guaranteed the loans in 2020 as part of Covid support packages. A spokesperson for the organisation told the outlet that, under the government’s own rules, the guarantor “may terminate guarantees if the relevant loan do not comply with certain eligibility criteria and if the lender does not act in accordance with a certain standard of care”. 

The British Business Bank is also investigating £15m of loans Greensill made under a separate scheme for small firms. The bank is yet to make a decision on whether to suspend the guarantees on these facilities. 

Administrators for Greensill declined to comment to the Financial Times. 

The withdrawal of these guarantees is likely 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 taxpayer £335m. 

The news comes as, according to the Financial Times, Credit Suisse told its clients that its efforts to recover billions lent to Greensill will cost the firm $291m (£242m). It said it expects legal and advisory fees, as well as the cost of propping up Greensill’s “skeleton staff” would cost more than twice its previous estimate of $145m (£120.6m) as it prepares for years of court battles and insurance disputes.