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German Bank Sues UK Over £330M Loan Guarantees
16 Jan
Summary
- Greensill Bank seeks £330 million from the UK for canceled Covid-era loan guarantees.
- UK government claims Greensill Capital breached program rules and acted in bad faith.
- German bank argues UK breached contract by canceling guarantees, citing EU legislation.
Germany's defunct Greensill Bank AG is pursuing approximately £330 million from the UK, accusing it of improperly canceling COVID-19 era loan guarantees. The bank asserts that the UK government breached its contractual obligations by terminating these guarantees, which were originally provided to Greensill's trade finance arm.
Legal arguments from the UK government state that Greensill Capital UK Ltd did not act in good faith, having lent excessive amounts to firms linked to steel tycoon Sanjeev Gupta. The UK government terminated the guarantees in 2022, citing non-compliance with program rules, specifically exceeding the £50 million lending cap to single companies.
The German bank counters that the UK failed to consider that Gupta-linked firms, known as the "Liberty Borrowers," were technically separate entities under EU legislation. Separately, German prosecutors charged two Greensill Bank board members in December 2023 for alleged regulatory breaches concerning Gupta's steel mill acquisitions.
