Recommendations & Conclusions
6 items
1
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Acknowledged
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury (the Treasury), the Department for Business, Energy & Industrial Strategy (the Department), and the British Business Bank (the Bank) about the involvement of Greensill Capital UK Limited (Greensill) in COVID-19 business support …
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On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury (the Treasury), the Department for Business, Energy & Industrial Strategy (the Department), and the British Business Bank (the Bank) about the involvement of Greensill Capital UK Limited (Greensill) in COVID-19 business support schemes.2
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Government response AI summary
The government provides a detailed overview of the COVID-19 business support schemes and Greensill's involvement, acknowledging the context for the Committee's report.
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HM Treasury
11
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Acknowledged
The NAO found that the Bank treated Greensill’s application like other similar applicants, but that the Department was particularly interested in Greensill’s accreditation. The Bank applied the same accreditation and due diligence process to Greensill as it did to the two other non-bank lenders that it considered. Between April and …
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The NAO found that the Bank treated Greensill’s application like other similar applicants, but that the Department was particularly interested in Greensill’s accreditation. The Bank applied the same accreditation and due diligence process to Greensill as it did to the two other non-bank lenders that it considered. Between April and September 2020, the Department had eight email exchanges with the Bank requesting updates on the status of Greensill’s accreditation, and whether it might be accredited to lend up to £200 million per borrower.28 The Department told us that these emails were “not putting pressure” on the Bank to accredit Greensill but rather asking the Bank “when it will accredit or not accredit Greensill”.29 The Department explained that these emails took place between “relatively low level” officials rather than ministers or senior civil servants.30
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Government response AI summary
The government acknowledges the committee's point and is updating the Shareholder Relationship Framework Document, as part of which it will consider changes regarding operational independence and departmental correspondence with the Bank. It will inform the Committee of the outcome of its considerations.
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HM Treasury
12
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Acknowledged
The Department told us that it had requested updates on when a decision would be made about accrediting Greensill so that it could decide whether it needed to create a “separate bespoke solution … [if] the process was ultimately going to end in a no”.31 It explained that its interest …
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The Department told us that it had requested updates on when a decision would be made about accrediting Greensill so that it could decide whether it needed to create a “separate bespoke solution … [if] the process was ultimately going to end in a no”.31 It explained that its interest was because Greensill was a major financier to Liberty Steel which is part of the GFG Alliance and the UK’s third-largest steel manufacturer.32 The Department told us that its steel team was having “very active live discussions” with Liberty Steel, together with a whole range of other steel companies, as Liberty Steel was experiencing financial difficulties caused by the COVID-19 pandemic. The Department explained that it was working out “what the different paths might be to provide Government support to those companies”, and that if the Bank was to accredit Greensill, the Department would not need to run a separate process to develop bespoke support, as Liberty Steel could access loans via CLBILS.33 23 Qq 15, 88 24 C&AG’s Report, Figure 13 25 Q 45 26 Q41 27 Q 18 28 C&AG’s Report, para 12 29 Qq 20–21 30 Qq 24, 70 31 Q 21 32 C&AG’s Report, para 8 33 Q 20 14 Lessons from Greensill Capital: accreditation to business support schemes
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Government response AI summary
The government acknowledges the committee's point and is updating the Shareholder Relationship Framework Document, as part of which it will consider changes regarding operational independence and departmental correspondence with the Bank. It will inform the Committee of the outcome of its considerations.
Read full response →
HM Treasury
18
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Acknowledged
Greensill lent a total of £418.5 million under the government’s COVID-19 business support schemes between July and October 2020. Of this, Greensill lent £400 million under CLBILS, the maximum amount it was authorised to lend, through eight loans of £50 million. This made Greensill the fifth largest lender under this …
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Greensill lent a total of £418.5 million under the government’s COVID-19 business support schemes between July and October 2020. Of this, Greensill lent £400 million under CLBILS, the maximum amount it was authorised to lend, through eight loans of £50 million. This made Greensill the fifth largest lender under this scheme. Under CBILS, Greensill made four loans worth £18.5 million.53
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Government response AI summary
The government acknowledges the committee's finding by reiterating the total amounts Greensill lent under CLBILS and CBILS.
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HM Treasury
19
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Acknowledged
On 12 October 2020, the Bank launched an investigation into Greensill’s compliance with the CLBILS scheme rules. This was 10 days after the Bank first noticed that Greensill had made six CLBILS loans on 30 September to companies associated with the GFG Alliance; in addition to a loan made in …
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On 12 October 2020, the Bank launched an investigation into Greensill’s compliance with the CLBILS scheme rules. This was 10 days after the Bank first noticed that Greensill had made six CLBILS loans on 30 September to companies associated with the GFG Alliance; in addition to a loan made in July to SIMEC International (UK) Limited, another GFG Alliance company.54 The Bank told us that it was “very surprised” when it realised that £350 million of Greensill’s £400 million lending allocation had gone to GFG Alliance companies, as the Bank had set the limit for group lending at £50 million. Moreover, the Bank told us that it had explicitly communicated the group lending rules to Greensill, using British Steel as an example to explain that the lending limit would be £50 million for the whole group, not per subsidiary.55
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Government response AI summary
The government confirms that the Bank launched an investigation in October 2020 into Greensill's compliance with CLBILS rules due to concerns over £350 million lent to GFG Alliance companies, which appeared to contravene the £50 million group lending cap.
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HM Treasury
20
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Acknowledged
The Bank told us that it had acted immediately to protect the taxpayers’ position by preventing Greensill from making any further loans under the schemes.56 The Bank engaged Ernst & Young (EY) between October 2020 and March 2021 to examine all eight of Greensill’s CLBILS loans.57 The Bank explained that …
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The Bank told us that it had acted immediately to protect the taxpayers’ position by preventing Greensill from making any further loans under the schemes.56 The Bank engaged Ernst & Young (EY) between October 2020 and March 2021 to examine all eight of Greensill’s CLBILS loans.57 The Bank explained that its investigation considered both Greensill’s compliance with the scheme rules around lending to groups and more broadly “whether they were a prudent lender, whether they had fulfilled the standard of care, whether they had acted in good faith and whether they had brought the scheme into disrepute”. Following EY’s report, the Bank provisionally concluded that Greensill was in breach of the scheme rules. The Bank informed Greensill of its decision on 2 March 2021 via a ‘Letter of Concern’.58
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Government response AI summary
The government acknowledges the Bank's actions, stating the loan guarantees remain suspended during the ongoing investigation and outlining the potential maximum liability if the guarantee is reinstated.
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HM Treasury