Giant firms hand back billions in Covid loans
JCB and Westfield lead the race to repay BofE – and British taxpayers
BIG corporations have handed back billions of pounds in taxpayerbacked Bank of England loans that have been issued since the pandemic hit Britain.
A probe by The Mail on Sunday found shopping centre chain Westfield, industrial machinery conglomerate CNH – backed by the Italian dynasty behind Fiat – and UK manufacturer JCB have all settled their loans in the past month.
Half of the 14 largest loans from an official list published last June have now been repaid. Those seven loans were worth £4.2 billion.
It is understood that many smaller loans have also been repaid and that £12.2 billion in agreed lending across 49 firms is outstanding.
The larger repayments came as the Covid crisis was once again threatening to engulf the economy, indicating that some companies are now in a stronger financial position than they anticipated last year.
The Bank of England and the Tr e a s u r y launched the Covid Corporate Financing Facility loan scheme last March to avoid a cash crunch at large companies. It was part of a package of measures announced by Chancellor Rishi Sunak and was widely praised at the time.
But the list of recipients published by the Bank of England in June drew criticism because it included i nternational firms backed by wealthy foreign sponsors and others with links to tax havens.
Those that have repaid the cash include pest control group Rentokil and pub and restaurant supplier Compass – both FTSE-listed businesses. Privately- owned l uxury French fashion house Chanel and €43 billion (£39 billion) German pharmaceutical conglomerate Bayer have paid back their loans.
JCB said it had paid at the end of December, well ahead of the April deadline. Chief executive Graeme
Macdonald said the company was forced to close factories for several weeks, but they had reopened over summer and confidence among customers had increased.
Many of the largest loans yet to be repaid were taken out by firms in sectors worst hit by the lockdowns. They include airlines easyJet and Ryanair, hotels giant IHG and car manufacturer Nissan. All had loans of £600 million.
German chemicals manufacturer BASF, recipient of the biggest loan at £1 billion, has six plants in the UK. It is due to repay in March.
Around £85 billion is understood to have been made available to 181 firms since March. Companies whose UK business comprises a relatively small part of their overall global revenue include Westfield, owned by French shopping centre conglomerate Uni bail-Rodamco-Westfield. URW says group rental income from UK properties added up to €211 million in 2019, about 7 per cent of the group’s €3.1 billion total.
The company paid a €747 million (£674 million) dividend at the end of March just weeks before agreeing the Bank of England loan. The payment was rubber- st amped by shareholders just days before details of the loan emerged. It cancelled a second dividend which would have been worth the same amount again.
Shares in CNH, which makes agricultural and construction machinery, are listed on stock exchanges in Italy and the US. The wealthy Italian Agnelli family, the dynasty behind the Fiat motor company, owns a major stake.
Chanel, which paid a £1.3 billion dividend after a bumper 2019, is controlled by billionaire brothers Gérard and Alain Wertheimer, who both have major stakes. Its main operation is in Paris but it moved its corporate headquarters to London two years ago. Its UK turnover was £700 million in 2019 compared with its global sales of around £9 billion.
It said in a statement: ‘This was a short-term credit facility. Chanel fulfilled all the eligibility criteria and this loan was repaid in full in September 2020.’
It said it had not made use of Government furlough schemes.
Restaurant supplier Brakes, which i s owned by $ 60 billion (£ 44 billion) turnover American food giant Sysco said it intended to settle its £600 million loan when it becomes due in May.
US oil services group Baker Hughes, a $17 billion conglomerate whose UK subsidiary has links to low-tax Bermuda, set up a special purpose vehicle to apply for a loan in April. It did not say when it plans to repay the money.
Other recipients of outstanding £300 million loans include retail giants John Lewis, Boots and Burberry.
One banking source said: ‘In order to help the worst hit sectors and avoid anti- competitive state aid concerns, the l oans had to be offered out more widely than some would perhaps have liked. There’s no doubt that some of the recipients might look less deserving than others as a result. But the support got to where it was most needed – including healthy firms that were hit by forced closures.’