Greensill Used Taxpayer Loans to Cut Exposure to Mr Sanjeev Gupta
California News Times, citing a Financial Times report revealed that Greensill Bank uses state-sponsored loans from three European governments to reduce exposure to companies owned by Mr Sanjeev 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.
FT said that a Report from German law firm CMS Hasche Sigle’s Administrator Mr Michael Frege revealed “Bremen-based banking subsidiaries in Greensill faced an increased pressure from the German Financial Supervisory Authority BaFin in 2020 to 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. 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. 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 EUR 2.8 billion to Bremen-based banks.”
GFG companies in France, Italy and the Czech Republic have acquired four loans worth a total of EUR 190 million, and their respective governments have provided a guarantee of 80% or 90% of the value of the loans. In France, the state investment bank BPI supported two loans by Greensil Bank to the Alvance Aluminum Group, EUR 17 million and EUR 10 million. Liberty Magona Srl, which forms part of GFG’s steel business, received a EUR 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 EUR 76 million loan with the support of the country’s export credit agency, Egap.
According to the FT report, lawyers working for managers are considering the effectiveness of loan guarantees.
Supply chain finance group Green Sill Capital collapsed into power in March. The lender’s relationship with Gupta’s company is currently Criminal investigation Invasion of GFG by the Serious Fraud Office in the United Kingdom.