Banks in talks about joint recovery of £35bn Bounce Back Loans
September 18, 2020Sky News reported earlier today (18-09-2020) that the High street banks are examining the creation of a "recoveries utility" that would collect Bounce Back Loans,
Britain's biggest banks are in talks to set up a new vehicle that would take charge of recovering tens of billions of pounds of COVID-19 debts as lenders seek to avoid a public relations crisis when the emergency loans fall due next year.
Sky News has learnt that the main banking lobby group, UK Finance, has commissioned a feasibility study for a "shared recoveries utility" that would seek to create distance between individual banks and the pursuit of repayments under the Bounce Back Loan Scheme (BBLS).
The talks are at an early stage, but underline the alarm within the major UK high street banks about the reputational risks associated with chasing money from well over one million embattled small businesses.
Under the BBLS, which has become the largest of Chancellor Rishi Sunak's coronavirus lending schemes, companies can borrow up to £50,000 on an interest-free basis.
The loans are fully guaranteed by the government, but sit on individual banks' balance sheets, meaning that they are responsible for collecting the money when it becomes repayable.
In July, the Treasury trumpeted the fact that more than 1 million Bounce Back Loans had been approved under the program, and the most recent public figures showed that 1.17 million facilities had been approved with a total value of £35.47bn.
The latest figures, which are now being issued on a monthly basis, are to be published next Tuesday.