Wed. Dec 1st, 2021

David Cameron has called for Lloyds Banking Group to reverse a decision to sever ties with the ill-fated Greensill Capital, calling on a councilor he coined while serving as prime minister.

According to people familiar with the matter, Cameron campaigned with Lloyds in January when he contacted Lord James Lupton, a director of the bank who was previously a Conservative party treasurer, in a successful attempt to bank the bank. persuaded to continue doing business with Greensill.

Lupton, Tory treasurer from 2013 to 2016, donated more than £ 3 million to the Conservative Party and was Appointed to the House of Lords in 2015, sparkling accusations of accomplices against the then Prime Minister Cameron of rival politicians.

Cameron earn millions of pounds as a boardroom adviser to Greensill, the supply chain financing company whose unraveled earlier this year dragged in the former prime minister Westminster’s biggest lobby scandal for a generation.

Months before Greensill’s collapse in March, Lloyds indicated he would stop doing business with the group, which jeopardizes a supply chain financing scheme for NHS pharmacies operated by Greensill, which relies heavily on the UK bank for financing. .

Following Cameron’s plea – which highlighted the threat of Lloyds’ withdrawal from the NHS scheme – the bank reconsidered its decision and agreed to continue funding the pharmacies for a period, the people familiar with the matter said. said.

Lupton declared his relationship with Cameron when he passed on the former prime minister’s request. However, some people within the bank found the former prime minister’s intervention via Lupton surprising and unwelcome, after the borrower made a business decision to end the relationship. They said it was crucial to cause the U-turn.

Lloyds said: “The decision to continue this facility in January 2021 was taken on a regular commercial basis and recognizing the importance of maintaining this facility for the NHS during the height of the pandemic.”

“This program ended after the administration of Greensill, with the bank being repaid in full,” Lloyds added. “There were no losses for the NHS, the pharmacies they supply or Lloyds Banking Group.”

Greensill declined to comment. Cameron did not respond to requests for comment. Lupton did not respond to immediate requests for comment and declined to comment via Lloyds.

Cameron was aware of the poor state of Greensill’s finances when he approached Lupton, after later telling MPs investigating the group’s collapse that it was only in December 2020 that he “became concerned that the company would be in serious financial trouble. ”.

The company’s founder, Lex Greensill, helped establish the “Pharmacy Early Payment Scheme” – which paid pharmacists for dispensing prescriptions before the NHS settled the bill – during his tenure as a government adviser to Cameron. The scheme was later administered by its finance company of the same name.

The former prime minister mentioned the benefits of the scheme when he defended his work for Greensill, saying in April that it “successfully reduced costs for the NHS and enabled many thousands of pharmacies to access early payments and low-cost credit” .

But while Greensill and Cameron both claimed the scheme saved the government £ 100 million a year, the UK’s watchdog for public spending last month said there was no evidence the program offered any benefit to taxpayers.

Cameron also previously cited the NHS scheme when he defended Greensill’s controversial “future debtors” product, in which the company financed hypothetical invoices that did not yet exist.

“An algorithm was used to help predict each pharmacist’s prescription behavior so they could get the money in advance to make the prescriptions real,” he told MPs in May. “It was incredibly popular among pharmacies.”

However, the National Audit Office’s report found that this practice made the pharmacy program more risky for the lender and that “no other financial provider was willing to take the risks that Greensill Capital took”. This meant the government had to step in and provide funding to pharmacies when Greensill collapsed.

Greensill acted as a middleman when arranging financing for the program, with banks like Lloyds providing the financing.

Lloyds decided to withdraw from the arrangement in January after Morgan Stanley stopped distributing Greensill’s bill-based investment products. The imprimatur of the US investment bank has previously comforted the British lender, people familiar with the discussions said.

Greensill tried to reassure Lloyds that Morgan Stanley would be replaced by Credit Suisse, but before Cameron’s intervention, the British bank refused to resume any funding until the Swiss bank started the role, according to people with knowledge of the discussions. .

Credit Suisse existed deep ties with Greensill, which has since potentially exposed some of its richest customers to billion dollars in losses, after the Swiss bank channeled $ 10 billion of their money into opaque investment products that some of Greensill’s customers with the highest risk.

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