Before its collapse in March, Greensill lent money to companies including Sanjeev Gupta’s metals group GFG Alliance, taking invoices in exchange for cash. The loans were then bundled into notes and sold on to banks and other investors. “The intervention of Banca Ifis makes it possible to avoid the severe social and economic consequences of the situation that has arisen in Aigis Banca as a result of the latter’s exposure towards Greensill Bank,” said Frederik Geertman, Banca Ifis’s chief executive.
Gupta’s GFG Alliance drew heavily on financing from Greensill and the collapse of the financing group has left the sprawling metals conglomerate teetering on the brink. The BaFin document shows German officials held a conference call in October with the Bank of Italy and the European Central Bank “regarding Sanjeev Gupta’s planned acquisition of a significant stake in Italy’s GBM Banca” — Aigis’s previous name before it rebranded at the end of last year.
Last year, Gupta entered discussions to buy a stake in Aigis Banca, which is majority-owned by private equity firm Metric Capital, according to people familiar with the matter and a document from Germany’s financial regulator BaFin. At the time, BaFin was investigating the Germany-based Greensill Bank, focusing on its high level of exposure to Gupta’s businesses. The bank collapsed into insolvency in March and German regulators have filed a criminal complaint against its management for suspected balance sheet manipulation.
Aigis Banca’s problems stemmed from investment products linked to invoices it had purchased from Greensill, according to people familiar with the matter. These included receivables-backed notes linked to Gupta’s metals empire, with a document seen by the FT showing that the bank had exposure linked to his Liberty Commodities business. With GFG defaulting on its debt to Greensill, buyers of the loans, which include Credit Suisse’s asset management arm, are facing big losses.
Wyelands Bank announced earlier this month that it is to be sold or wound up, after its accounts revealed that repayments on 80 per cent of its loan book were overdue. The Bank of England ordered Gupta’s bank to repay customer deposits in March, amid rising concerns over its financial position. As well as using Greensill as a source of finance, Gupta owned his own bank in the UK called Wyelands Bank. He looked to acquire a stake in Aigis at a time when Wyelands was coming under increasing pressure and scrutiny from regulators.
While the investment products that Aigis bought from Greensill were covered by insurance policies, these are yet to pay out, said people familiar with the matter. Banca Ifis said it was taking over €298m of loans and €135m of Italian sovereign bonds from Aigis, along with €440m of its customer deposits. The bank added that “securities related to Greensill” were excluded from the transaction. Italy’s Interbank Deposit Protection Fund also provided €49m to support the transaction. Greensill and Gupta’s GFG Alliance declined to comment.
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