Statement
The Bank of England today published the response to a request made under the Freedom of Information Act, in respect of communications between David Cameron and Bank of England officials. This statement sets out the context of those communications. We will also publish a response to the Treasury Committee’s letter on the inquiry into the lessons to be learnt from the failure of Greensill Capital in due course.
Greensill contacted the Bank and HM Treasury on a number of occasions in the spring of 2020 to discuss potential access to the Covid Corporate Financing Facility (CCFF). None of the options proposed by Greensill were consistent with the published terms of the CCFF, as set out in the Market Notice, or with the risk management of the scheme. The firm was not granted access to the CCFF.
David Cameron, in his capacity as adviser to Greensill, contacted the Bank on 5 and 7 March 2020 to discuss financing conditions at the onset of the pandemic. He offered a meeting with Greensill to provide information on emerging risks to supply chain financing for SMEs and to discuss the 2009 Bank of England scheme to support supply chain financing during the financial crisis. A call was arranged by exchange of emails, and took place on 17 March between the Bank, Lex Greensill and David Cameron. On 16 March, Greensill sent a letter to the Bank which, and then at the meeting itself, covered the pressures on supply chain financing in the then current market conditions and enquired about the possibility of re-establishing the 2009 scheme.
On 17 March the Bank announced the CCFF scheme to support financing of large corporates and on 18 March issued a Market Notice setting out the terms of the scheme. Following that announcement, Lex Greensill contacted the Bank to share further information and subsequently submitted an application to the CCFF. Greensill were informed that they did not meet the published terms of the scheme.
After being informed that their application did not meet the CCFF terms, Greensill approached HM Treasury to propose changes to the terms of the CCFF and to their application, of which the Bank was informed. David Cameron contacted the Bank on 3 April asking for clarity on why the Greensill proposals did not qualify. He contacted the Bank again on 22 April about Greensill’s application and requested a further conversation with Lex Greensill. This conversation took place on 24 April and the Bank explained that Greensill’s revised proposal was ineligible under the terms of scheme, which were a matter for HM Treasury.
On 1 May 2020, HM Treasury, after consulting with the Bank, issued a call for evidence and consulted a number of supply chain finance firms including Greensill on broadening the scope of CCFF to enable access for providers of supply chain finance. At the height of the pandemic, Government was clear that all support schemes would be kept under review to ensure maximum effectiveness, and so that all options to protect jobs and livelihoods could be explored. Greensill had a number of meetings with HM Treasury and the Bank, and submitted further documentation in respect of these proposals. No changes were made to the CCFF scheme as a consequence of this exercise.
Further information about the Covid Corporate Finance Facility
Further details about the CCFF can be found on the Covid Corporate Finance Facility page and in the Market Notices published 18 March 2020 and the Market Notice published 9 October 2020.
At a summary level, to be eligible for the scheme, applicants needed to:
- Make a material UK contribution
- Be investment grade rated (or equivalent) as at 1 March 2020 (with further ongoing credit quality review described in more detail on the scheme webpage linked above)
- Not be PRA- or FCA-regulated
- Not be a public undertaking
- Not be a leveraged investment vehicle
Full details of eligibility criteria are available in the Market Notices linked above.
Notes for editors
HM Treasury responded to a Freedom of Information request which asked for details of correspondence between the Chancellor and David Cameron relating to Greensill’s applications for Covid finance schemes on 8 April 2021: Response to a Freedom of Information request on Greensill
HM Treasury also responded to a FOI request which asked for details of meetings and exchanges between the Treasury and Greensill from April to June 2020 on 19 March 2021: HM Treasury/ Greensill meetings
The ‘2009 scheme’ referred to above is the Secured Commercial Paper Facility, set up during the Financial Crisis in 2009, to support the provision of working capital to a broad population of companies. See original news release for the scheme and the Market Notice
Please note that some of the additional material provided in relation to the meeting on 17 March may not technically fall within the request made under the Freedom of Information Act. However, it has been shared by exception, in order to provide additional clarity to this statement.