Lloyds accused of failing small companies because it decreased its lending | EUROtoday

Lloyds Bank enterprise prospects and whistleblowers have accused it of failing small companies because it tried to scale back lending after the monetary crash of 2008.

Business homeowners who borrowed from Lloyds round that point have advised the BBC their companies collapsed after the financial institution launched them to its Business Support Unit (BSU), supposed for purchasers it thought of have been struggling.

A whistleblower has advised Panorama there was a “pattern” of “pigeonholing” small companies as “distressed” once they have been “salvageable”.

Lloyds mentioned it “categorically denied” the allegations and its BSU “supported many thousands of customers”.

During the banking disaster of 2008, the federal government bailed out banks to save lots of them from collapse, together with Lloyds which bought £20bn of taxpayers’ money.

Then Prime Minister Gordon Brown mentioned as a situation of the bailout banks should shield lending to small and medium sized companies.

But over 15 years, the BBC has heard allegations that Lloyds’ BSU failed small companies.

James Ducker, who bought monetary merchandise to companies for Lloyds in 2009, mentioned “the approach to lending became do not lend. Beyond that, get as much money back that we’ve lent as possible.”

He mentioned prospects within the BSU have been “easy pickings”.

A whistleblower who labored for a consultancy agency introduced in by Lloyds to advise small companies within the BSU advised BBC Panorama that of their expertise the businesses described by the financial institution as distressed “probably weren’t distressed, they were salvageable. I believe there was a pattern. There’s no other way to put it.”

Wishing to stay nameless, the whistleblower accused the financial institution of “planning the administration of these entities in advance of reports that were produced. The business plan was completely ignored. They weren’t interested in saving the company.”

Lloyds mentioned: “These historic allegations have been thoroughly investigated by the group and found to be unsubstantiated. They are categorically denied.”

In 2009, Martin Woolls, a ferry boat captain from Weston-Super-Mare, had a residential mortgage with HSBC and unsecured loans with Lloyds.

He had not too long ago purchased a brand new boat to increase his enterprise, which he’d been operating since 1981, and agreed to mix all his lending right into a business mortgage and overdraft with Lloyds – each secured in opposition to his residence.

The overdraft was authorised at an preliminary price of two.75%. However, within the wake of the crash, the charges on Martin’s overdraft surged to 16%. They peaked at 26.4% when he exceeded his overdraft restrict. Bank of England base charges on the time remained static at 0.5%.

“Who the hell in the world can cope with those interest rates? Nobody. No business anywhere can cope with that. It’s hideous,” he mentioned.

Lloyds mentioned Martin’s price rises have been “in accordance with the terms” of his agreements and it would not settle for they “ultimately distressed” his enterprise “or “led to its collapse.”

By 2016, and with base rates still below 1%, Lloyds called in Martin’s debts.

His business went under, and the bank is still seeking repossession of his home, something Martin is fighting in court. He said the impact of securing the borrowing against his home wasn’t properly explained to him.

Lloyds said “repossession is at all times a final resort” but it is “required within the pursuits of depositors and shareholders to guard its safety when loans are defaulted upon”.

It said numerous inquiries into Martin’s case have found “no proof of wrongdoing”.

Keith Elliott borrowed £8.6m from Lloyds in 2006 for his Yorkshire-based car auction business.

An internal Lloyds email from July 2008 described Keith’s business as “worthwhile” but struggling short term with cashflow issues as he redeveloped a new site.

The bank suggested Keith take on a non-executive director from business consultants PwC. Keith agreed but the consultant though not appointed as a non-exec still advised him to re-organise the finances and apply for a further £2m overdraft. And within a week, introduced Keith to the BSU.

However, unbeknown to Keith, PwC was advising Lloyds to sell the business, even though it still belonged to Keith.

In August 2008, a partner at PwC emailed Lloyds saying: “appears like an accelerated sale with an enormous success price/warrant for the financial institution to mirror the fairness danger you’re taking”.

Keith advised the BBC: “The truth of the matter right here – was their plan to steal my enterprise behind my again. Yes or no? That’s it. That’s all we have to know.”

Keith didn’t want to sell the business or let Lloyds take a stake, but by December the bank called in its loans and Keith’s business collapsed, with PwC paid to oversee the breakup.

His Leeds business was sold for around £4m, despite being valued at £13m just months earlier, with Lloyds taking a 15% stake.

Lloyds said there was “nothing deceitful or untoward within the introduction” of PwC and that the consultants it worked with had a “confirmed monitor file of saving and growing companies.”

It mentioned the BSU was not “designed to generate revenue” and in some circumstances an equity stake may be taken with the agreement of customers “to mirror the extent of danger taken”.

It added the insolvency caused it to lose £5.5m and that Keith’s personal spending was draining the company of money.

PwC said: “Mr Elliott’s unsubstantiated allegations have been thought of or investigated by a number of authorities, no discovering of wrongdoing has been made in opposition to PwC or its personnel.”

Keith said Lloyds described his company as “strong” and said it was wrong to blame its failure on his spending.

Kashif Shabir was a successful property developer who agreed a £3m loan with Lloyds but claims he was pushed by the bank into what he calls a “hearth sale” of his assets after the crash.

Kashif suspects the BSU had never really been there to support him, describing it as “an abattoir”.

He turned to Avon and Somerset Police believing he was the victim of a financial crime. Police told him that a review found no evidence of criminality. However, he later discovered that Lloyds had been told he was going to meet with the police and that his case was going to be closed before the meeting had taken place. This was despite police telling him at that meeting that there would be a further review of his case.

The Independent Office for Police Conduct (IOPC) found the police had shared confidential information with Lloyds for “no obvious policing goal”, but said it found no evidence of corruption.

Avon and Somerset Police denies corruption “within the strongest doable phrases”.

Lloyds mentioned it “went to huge lengths over a few years” to try to get the customers in this article “again on monitor with their repayments, displaying appreciable forbearance and understanding”.

It added: “Whenever complaints have been made … they’ve been totally investigated” and “no proof of any wrongdoing has been discovered.”