Recommendation 10

We asked the Bank why it had accredited Greensill despite several press reports highlighting it had a string of its clients default on their debt, potentially damaging Greensill. The Bank told us that it discussed the losses with Greensill and their potential impact on its financial position, which had provided “what appeared to be a plausible answer”.22 It explained that other lenders had also taken similar losses on the same 14 C&AG’s Report, paras 11, 1.13, 2.15 15 Q 33 16 Q 33 17 Qq 93–94 18 Qq 95, 121–122 19 Q 95 20 Q 39 21 Letter from the Chief Executive of the British Business Bank to the Chair, 7 September 2021 22 Q 88 Lessons from Greensill Capital: accreditation to business support schemes 13 company, so it did not feel like a Greensill-specific issue. The Bank further explained that these defaults related to problems with the underlying borrowers rather than a systemic issue with Greensill making wrong lending decisions.23 We also questioned the Bank on the risks that the German Regulator, BaFin, raised regarding Greensill’s exposure to companies within the GFG Alliance—a concern that was also raised in several press reports prior to September 2020.24 The Bank told us that the Treasury had made it aware that there were growing regulatory concerns by November or December 2020, but this was “perhaps a little late” as Greensill had made its CLBILS loans by the end of September 2020.25 The Bank also confirmed that it had been unaware that Greensill’s insurance provider, Tokio Marine, were investigating Greensill.26 We asked the Bank whether looking back with hindsight, it would have done anything differently. The Bank told us it did not think that it had missed anything based on the information available at the time Greensill was accredited, while acknowledging that “with more time and a different process” it might have uncovered something different.27 The Department’s interest in Greensill’s accreditation