British Business Bank pays £1.1m to find loan rule breaches

THE British Business Bank is spending more than £1.1m on auditors as it seeks to weed out lenders that have broken the rules over Covid-19 rescue loans.

Bosses are searching for cases where businesses were wrongly handed support through taxpayer-backed emergency schemes. Banks have lent £52bn to more than 1.2m businesses since the support was introduced to prevent an economic collapse.

The programmes being examined include the Coronavirus Business Interruption Loan Scheme – where ministers have agreed to foot 80pc of a bank’s loss if a borrower defaults – and Bounce Bank loans, where the guarantee is 100pc. Firms had to meet a scheme’s criteria to get the cash, such as being a certain size or showing they were financially resilient, and banks which lent money without sticking to the regulations could lose any compensation paid out for their losses.

Banks came under heavy pressure to get money out as quickly as possible in the early days of lockdown, and some executives were concerned they could be made scapegoats.

The BBB administers the schemes and has asked auditors from KPMG and RSM to review loans handed out by Barclays, Lloyds, HSBC and Natwest, as well as smaller players.

KPMG is being paid £680,000 to provide audit advisory services on the lending schemes. RSM has also won two audit contracts from the bank worth a total of £450,673.

A spokesman for the BBB said it had a monitoring programme for all support schemes.