British banks have received more than £4.4 billion from taxpayer money to cover defaults on the £77 billion of state-guaranteed loans to struggling businesses during the coronavirus lockdown.
The most recent official data, released on Tuesday, showed that banks had flagged 6.2 billion pounds worth of bad loans, which means taxpayers have lost more money on different COVID-19 schemes.
Banks flagged approximately £1.2 billion in loans as potentially fraudulent. Many of these loans were discovered on the books of smaller lenders such as Conister Finance and New Wave Capital.
After the British banks have received more than £4.4 billion from taxpayer money to cover defaults in the £77 billion of state-guaranteed loans.put a lockdown in place in March 2020 because of the pandemic, ministers moved quickly to set up programs to help small businesses get credit.
Most of the losses came from the £British banks have received more than £4.4 billion from taxpayer money to cover defaults on the £77 billion of state-guaranteed loans.billion “bounce back” loan scheme, which offered companies up to £50,000 with only light checks, leaving it vulnerable to fraud. The scheme included a full state guarantee on any damages.
Figures drawn up by the British Business Bank showed lenders received the vast majority of the total £4.1 billion payment from the taxpayer under state guarantees. This included £640 million from loans that were suspected of fraud. Lenders suspected fraud in bounce-back loans totalling £1.1 billion.
David Fleming, head of UK restructuring at Kroll, said: “These are huge numbers, and we are likely to see further challenges given the economic headwinds and rising interest rates.”
Across all COVID loan schemes, the latest figures showed that £14.5 billion of the £77 billion had been repaid, with £38 billion repaid by borrowers on schedule.
About a third of loans made by Conister Finance and about 40 per cent of New Wave Capital’s lending have been repaid on time or in full. The rest is due, defaulted on, claimed, or refunded by the British Business Bank.
More than a quarter of funds taken out through Conister and New Wave Capital are suspected of fraud, compared to an average of 2.4 per cent across lenders. A little over 55 per cent of loans made by Starling have been repaid on time or early.
