UK pays lenders $429mn to cover virus loan losses

Bloomberg

The UK has paid lenders £352 million ($429 million) to cover losses so far on virus loans to small businesses, a number that’s likely to grow further with £1.6 billion of further claims lodged by the lenders at the end of March.
Metro Bank Plc, which lent a total of £1.4 billion under the Bounce Back Loan Scheme, has received £122 million as of March 31 after claims for 3,015 loans were processed and payment released, according to a report. Barclays Plc received £88 million and Starling Bank £61 million.
The £352 million represents about 0.7% of the 1.5 million loans at the end of March. About 3.2% are in the claimed stage, 4% of the loans are in default and 7.4% are in arrears, the data shows.
The government guaranteed 100% of loans extended in the Bounce Back Loan Scheme, which was intended to enable smaller businesses to access finance more quickly during the coronavirus outbreak. But concerns about the level of fraud are mounting in relation to the program, with the UK’s spending watchdog criticizing the government’s failure to put effective measures in place to protect the taxpayer money.
The data shows that UK lenders extended £46.6 billion through BBLS. Barclays was the top provider, making a total of 344,091 loans totaling £10.8 billion during the pandemic. NatWest Group Plc was the second-largest lender, handing out £8.9 billion to applicants, followed by Lloyds Banking Group Plc. Currently 7.4% of the loans are in arrears, the data shows.
A total of £77.1 billion ($93.4 billion) was lent across the three government-guaranteed programs established in the first half of 2020 to support UK businesses impacted by the pandemic, according to the Thursday report.
The Coronavirus Business Interruption Loan Scheme and Coronavirus Large Business Interruption Loan Scheme, which targeted larger companies, are showing much lower levels of such claims, with £69.2 million paid out so far, according to the data. About 1.3% of CBILS facilities are in arrears and just 0.3% of CLBILS.
Those rates are insignificant, according to Benjamin Wiles, managing director of consulting firm Kroll Inc.,“The one caveat is that is this data is up to March, and quite a lot has happened and we have experienced many headwinds over the last four months, but it certainly does not ring out to me that these facilities will be the primary source of any trouble around the corner.”