Gupta pulls funding for Wyelands Bank as his empire teeters on the brink of collapse
Sanjeev Gupta has pulled the plug on his UK bank as his empire teeters on the brink of collapse.
The industrials tycoon said he is no longer willing to keep funding Wyelands Bank, which was ordered by regulators to return customers’ deposits in March.
Wyelands was part of Gupta’s loosely connected network of businesses, the GFG Alliance, which has been thrown into chaos following the collapse of its key lender Greensill Capital.
On the brink: Industrials tycoon Sanjeev Gupta said he is no longer willing to keep funding Wyelands Bank, which was ordered by regulators to return customers’ deposits in March
Wyelands said it would now attempt to sell itself to new investors, or wind up its operations.
The Bank of England’s regulatory arm, the Prudential Regulation Authority (PRA), signalled just how concerned it had become with Wyelands when it ordered the lender in March to hand back all deposits it had taken from individuals.
Wyelands revealed yesterday that it had returned £194million, which had already been reduced from £459million at the end of April 2020, and had just £600,000 left to return to customers who it was still trying to track down.
In March, Gupta said he planned to ‘submit a new strategy’ for Wyelands to the regulator, in an attempt to take the bank forward.
But in a sign of the increasing pressure on his finances, Wyelands has now said that the tycoon ‘will not be providing further funds to finance a new strategy for the bank’.
Gupta had already provided £75million of loans to prop Wyelands up last May, £42.9million of which has been converted into an ownership stake.
In accounts filed yesterday, for the year to April 2020, the extent of the trouble at Wyelands was laid bare.
The bank was creaking under the weight of bad debts, as repayments on 80 per cent of its loan book were overdue, and it made a loss for the year of £69.5million.
Chairman John Crompton said: ‘Some of the bank’s customers began to come under significant liquidity pressure and this resulted in an increase in late payments.’
This led the bank to start quietly winding down its balance sheet last year ‘with the goal of being in a position to repay all its deposits’. The bank had lent to several businesses which supplied the Gupta empire.
But some of these suppliers were defaulting on their debts.
This left their customers – GFG entities owned by Gupta – owing money to Gupta’s own bank.
The crisis at Wyelands raises more questions over the stability of the GFG empire, after Tata Steel claimed in court documents that Gupta’s metals group was struggling to pay debts owed as far back as May 2020.