Regulator questions lenders over exposure to Greensill

Major insurer insists it has no material exposure

Regulator questions lenders over exposure to Greensill

Insurance News

By Roxanne Libatique

Insurance Australia Group (IAG) has confirmed it does not have material exposure to Greensill Capital (Greensill), despite previously conducting business with the failing trade finance firm.

This assurance, as published in the Australian Financial Review, follows a probe by the European Central Bank (ECB) to find out which lenders are exposed to Greensill and its key client GFG Alliance.

Greensill lends businesses money to pay their suppliers in return for a fee. It secured funding by passing on the load to investors through funds such as those of Credit Suisse. However, the company is now preparing to file for insolvency after Credit Suisse abandoned €10 billion of supply chain finance funds linked to the group. Germany’s supervisory authority BaFin also froze its Bremen-based bank and filed a criminal complaint alleging balance sheet manipulation.

In Greensill’s recent court battle, court filings showed that Greensill was trying to restore around US$4.6 billion of credit insurance as the loss of coverage could trigger a wave of insolvencies, according to The Guardian.

Apollo Global Management has revealed it wants to take on Greensill’s most creditworthy clients, as reported by the Australian Financial Review. The firm has already contacted some of the clients to reassure them that it will provide financing if the deal goes ahead, according to two people familiar with the matter.

However, Apollo said it will not take on exposure to GFG and might leave behind many SoftBank-backed companies that Greensill has financed via the Credit Suisse funds. It is looking to take over Finacity, a Greensill member that provides administrative services underpinning securitising invoices.    

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