Greensill used taxpayer loans to reduce his exposure to Sanjeev Gupta


Greensill Bank is using state-sponsored loans from three European governments to reduce exposure to companies owned by Sanjeb Gupta, the potential exposure of taxpayers to the Metal King’s struggling business empire.

The program, described in a document seen by the Financial Times, provides an overview of tactics Greensill Bank has taken in an attempt to appease regulators concerned about the funding risks of Gupta’s GFG Alliance. ..

Supply chain finance group Green Sill Capital collapsed in 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 UK.

Last year, Bremen-based banking subsidiaries in Greensill faced an increase. Pressure from German financial supervisory authority BaFin Reduce large-scale loans to GFG.

In response, Greensill Bank devised a plan to use government guarantees given under Covid’s 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 granted to three GFG companies in France, Italy and the Czech Republic to BaFin as cash collateral for existing loans from banks to GFG. I gave a preview. Report by Michael Frege, director of the German law firm CMS Hasche Sigle.

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

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

The Alvance Aluminum Group plant 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 reviewing the effectiveness of loan guarantees.

The loan was made to eight Gupta-linked companies in addition to a £ 400million taxpayer-guaranteed loan under the UK’s large business suspension loan program against the coronavirus. FT previously reported that Gupta rebuilt their business last year. Maximize the amount of UK taxpayer guaranteed loans he could get from the plan.

In France, the public investment bank BPI supported two loans from Greensil Bank to the Alvance Aluminum group, of € 17 million and € 10 million. Liberty Magona Srl, which is part of GFG’s steel business, received a loan of 86 million euros with the support of the Italian export credit agency Sace. At the same time, in the Czech Republic, GFG’s steel business, Liberty Ostrava, received a loan of 76 million euros with the support of the country’s export credit agency, Egap.

The whole group was rocked by the collapse of its biggest lender, Green Sill. GFG is currently trying to refinance and repay its creditors.

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

GFG and Greensil declined to comment.

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