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UK News Sanjeev Gupta stops repayments to troubled lender Greensill Capital

02:50  05 march  2021
02:50  05 march  2021 Source:   dailymail.co.uk

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A lender owned by Sanjeev Gupta has been ordered to repay all of its depositors in an unprecedented intervention by the Bank of England amid surging pressure on the steel tycoon. Wyelands Bank has been told by regulators to refund all retail customers following a cash injection by Mr Gupta . The magnate's GFG Alliance empire has come under unprecedented scrutiny this week after its main financial backer Greensill Capital lost the support of two asset managers that had underpinned its supply chain financing model.

Greensill Capital provided funding to two companies linked to Sanjeev Gupta . Payments made through Coronavirus Large Business Interruption Loan Scheme. Two companies linked to a billionaire British steel magnate received tens of millions of pounds worth of emergency government Covid loans despite employing just 11 people in the UK. London-based lender Greensill Capital , which employs former Prime Minister David Cameron as an adviser, provided funding to two metal trading businesses associated with Sanjeev Gupta , according to The Financial Times.

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The business empire headed by steel tycoon Sanjeev Gupta has stopped making payments to troubled lender Greensill Capital as it tries to hold onto its cash.

GFG Alliance, a web of Gupta-backed firms which includes Liberty Steel, has been reliant on Greensill in a relationship which has raised the suspicions of regulators in the UK and Germany.

But Gupta told senior colleagues that he would no longer be repaying money owed to Greensill, according to the FT.

a man wearing a suit and tie: Cash crisis: Steel tycoon Sanjeev Gupta's GFG Alliance has been reliant on Greensill in a relationship which has raised the suspicions of regulators in the UK and Germany © Provided by This Is Money Cash crisis: Steel tycoon Sanjeev Gupta's GFG Alliance has been reliant on Greensill in a relationship which has raised the suspicions of regulators in the UK and Germany

The chaos at Greensill has piled pressure on GFG, raising fears over thousands of jobs in the UK steel industry.

Sanjeev Gupta cash flow fears threaten jobs of British steel workers

  Sanjeev Gupta cash flow fears threaten jobs of British steel workers Sanjeev Gupta, 50, (pictured) an Indian-born British tycoon, has been dubbed the 'saviour of UK steel' after buying plants in Rotherham, Stocksbridge, Newport and Hartlepool. But he has been heavily reliant on Greensill for funding and the crisis there has left him seeking other sources of finance.

BaFin warned on Wednesday of “an imminent risk” that Greensill Bank would become over-indebted as it imposed a moratorium on the lender making disposals or payments . Oliver Santen, spokesman for the auditing association, which oversees the deposit insurance scheme for Germany’s private banks, said Greensill Bank had not followed rules underpinning the scheme. BaFin said on Wednesday that an audit found that Greensill Bank could not provide evidence of receivables on its balance sheet purchased from mining tycoon Sanjeev Gupta ’s GFG Alliance.

British supply chain finance lender Wyelands Bank, which forms part of Sanjeev Gupta 's metals-to-finance business empire, said on Wednesday it had decided to repay retail depositors after receiving a cash injection from Gupta . These represented its main funding source and its lending was largely to businesses, the report said. GFG's finances have come under scrutiny this week after Greensill Capital , which has been its main financial backer, lost the support of two asset managers who had underpinned large parts of the British-based firm's supply chain financing model.

Gupta was the ‘saviour of UK steel’ after a spending spree that saw him buy up plants in Rotherham, Stocksbridge in South Yorkshire, Newport and Hartlepool.

Greensill was plunged into crisis this week after several of its major backers walked away.

It is now in talks with private equity giant Apollo Global – but any rescue deal will not include the loans connected to Gupta or the German subsidiary Greensill Bank, according to a source close to the talks.

This would leave Gupta’s empire desperate for cash. GFG relies on supply-chain financing from Greensill to pay its suppliers and without that money it could struggle to pay its bills.

Separate efforts by Gupta to get a loan from Canadian asset manager Brookfield fell through this week.

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A funding crisis at Greensill Capital could spill over to some of its high-risk borrowers and lead to losses for insurers and banks that have done business with the UK-based supply chain finance firm if its clients default, according to several industry experts and a review of public filings. Earlier this week, Greensill 's primary source of funding came to an abrupt halt. Swiss bank Credit Suisse Group AG and asset manager GAM Holdings AG suspended redemptions from funds that held most of their around billion in assets in Greensill notes over concerns about being able to accurately value them.

Sanjeev Gupta has amassed an empire of unloved industrial assets partly fueled by the embattled supply-chain finance specialist. Sanjeev Gupta has been feted by British royalty and European leaders. At the center of the unraveling of specialty finance firm Greensill Capital is Sanjeev Gupta , an Anglo-Indian steel entrepreneur building a new empire in an old industry. Greensill plans to file for insolvency in the U.K. this week and is in talks to sell parts of its business, excluding assets linked to Mr. Gupta , according to people familiar with the matter.

GFG’s decision to halt payments to Greensill shows signs of a growing rift between Gupta and the lender which has funded his vast empire.

German regulator BaFin had been closely watching Greensill’s subsidiary in the country, over fears it was too heavily exposed to Gupta’s businesses.

Earlier this week BaFin banned the subsidiary from doing business and filed a criminal complaint, accusing the bank of manipulating its balance sheet.

In the UK, concerns over the future of Gupta’s empire have also prompted action from regulators at the Bank of England.

They ordered Wyelands Bank, a firm which is part of the GFG group, to pay back depositors amid fears it was too closely connected with Greensill and Gupta.

A spokesman for the GFG Alliance said: ‘GFG Alliance has adequate funding for its current needs-and its refinancing plans to broaden its capital base and obtain longer-term funding are progressing well.

‘Our global efficiency drive means that our core businesses are operationally strong.’

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Gupta sounds alarm over his UK steel business after Greensill collapse .
Steel tycoon Sanjeev Gupta, 50, (pictured) told unions that Liberty Steel was 'performing well' worldwide and 'benefiting from a 13-year high in steel prices'.The 50-year-old tycoon told unions that Liberty Steel was ‘performing well’ worldwide and ‘benefiting from a 13-year high in steel prices’.

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