Greensill stripped of government guarantee on loans to metal tycoon

Greensill Capital has been stripped of a government guarantee on loans to the metals tycoon Sanjeev Gupta’s empire, after deciding it had breached the terms of pandemic lending programmes.

According to reports, British Business Bank (BBB) has informed Greensill that it is removing a taxpayer guarantee following an investigation into the UK-based fintech company’s compliance with the rules of the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

Greensill, which has a technology hub in Warrington, is the brainchild of former Citigroup Inc. and Morgan Stanley financier Lex Greensill.

Founded in 2011, Greensill specialises in supply-chain finance, a form of short-term cash advance that lets companies stretch out the time they have to pay their bills.

City sources said that accountants EY and law firm Hogan Lovells had been drafted in by the government to assess whether Greensill was in breach of the CLBILS rules.

One banking insider said the advisers had concluded in recent days that the terms had been breached in relation to areas such as the adequacy of the security taken by Greensill over assets owned by GFG Alliance, the network of companies headed by Mr Gupta.

Under the schemes introduced early in the pandemic by Rishi Sunak, taxpayers guarantee 80% of the value of the loan, although borrowers remain fully liable for the debt.

The CLBILS programme has been extended until the end of the month, and Mr Sunak plans to set out further details of a successor scheme in his Budget on Wednesday.

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