Greensill used taxpayer loans to cut exposure to Sanjeev Gupta

Greensill Bank uses state-sponsored loans from three European governments to reduce exposure to companies owned by Sanjeb Gupta, potential taxpayer exposure to the metal king’s troubled business empire Emphasized the degree of.

The scheme, described in a document viewed by the Financial Times, provides insight into the tactics Greensill Bank adopted when trying to quell regulators concerned about the risks of financing Gupta’s GFG Alliance. ..

Supply chain finance group Green Sill Capital collapsed into power in March International political and financial scandal.. The lender’s relationship with Gupta’s company is currently Criminal investigation Invasion of GFG by the Serious Fraud Office in the United Kingdom.

Last year, Bremen-based banking subsidiaries in Greensill faced an increase. Pressure from the German Financial Supervisory Authority BaFin Reduce widespread lending to GFG.

In response, Greensill Bank has devised a plan to use government guarantees granted under Covid economic measures to offset its credit risk, as reported by bank managers.

At the end of July 2020, Greensill Bank plans to use government-sponsored loans provided to three GFG companies in France, Italy and the Czech Republic to BaFin as cash collateral for banks’ existing loans to GFG. I gave an overview. Report from Michael Frege, administrator of the German law firm CMS Hasche Sigle.

The report explains that Greensil Bank’s credit risk to GFG is offloaded to the government. At the time of the collapse of Greensill, GFG companies were in debt of more than € 2.8 billion to Bremen-based banks, managers reported.

GFG companies in France, Italy and the Czech Republic have acquired four loans worth a total of € 190 million, and their respective governments have provided a guarantee of 80% or 90% of the value of the loans.

The factory of the Alvance Aluminum Group operated by GFG Alliance Ltd in Dunkirk, France. GFG has been shaken by the collapse of Green Sill and is currently trying to repay its creditors © Thierry Monasse / Bloomberg

According to the report, lawyers working for managers are considering the effectiveness of loan guarantees.

The loan was granted to eight Gupta-linked companies in addition to a £ 400 million taxpayer-backed loan under the UK Coronavirus Large Enterprise Suspension Loan Scheme. FT previously reported that Gupta rebuilt its business last year. Maximize the amount of loans backed by UK taxpayers He could get from the plan.

In France, the state investment bank BPI supported two loans by Greensil Bank to the Alvance Aluminum Group, € 17 million and € 10 million. Liberty Magona Srl, which forms part of GFG’s steel business, received a € 86 million loan with the support of the Italian Sace export credit agency. Meanwhile, in the Czech Republic, GFG’s steel business, Liberty Ostrava, received a € 76 million loan with the support of the country’s export credit agency, Egap.

The entire group was shaken by the collapse of its largest lender, Green Sill. GFG is currently trying to refinance and repay creditors.

Green Sill Bank Administration is below Criminal investigation Suspicion of balance sheet manipulation following a complaint from BaFin, who ordered a moratorium on the bank’s business in early March. A court audit conducted by KPMG found that Greensil Bank “could not provide evidence of the presence of accounts receivable on the balance sheet purchased from the GFG Alliance.”

GFG and Greensil declined to comment.

Greensill used taxpayer loans to cut exposure to Sanjeev Gupta Source link Greensill used taxpayer loans to cut exposure to Sanjeev Gupta

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