Home news Lloyds creates fund for firms hit by Carillion collapse

Lloyds creates fund for firms hit by Carillion collapse

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Lloyds Bank has said it will provide £50m to support its small business customers who are struggling after the failure of Carillion.Lloyds was among the banks that stopped backing Carillion after the government refused to insure its debts. The government has asked banks for assurances that they would help firms affected by Carillion’s collapse. Meanwhile, Nationwide building society has said it will take in-house jobs which were performed by Carillion. It said it wanted to provide “reassurances” at an “unsettling” time. On Wednesday, Business Secretary Greg Clark met representatives of some of the banks to seek assurances that they would support small businesses hit by Carillion’s liquidation. Afterwards, he said UK lenders were ready to give “tailored support” and flexibility when it came to repayments.How do companies win government contracts?Carillion collapse raises job fearsCarillion collapse: What next?Lloyds said its fund, which is now available, was for small businesses within Carillion’s supply chain that “may now be experiencing financial difficulty”.For the “most severely impacted” customers, that could mean capital repayment holidays on loans for six months to start with, to help with cash flow problems.Jo Harris, Lloyds managing director of business banking, said: “Small businesses don’t normally have the cash reserves that larger businesses do, so any interruption to their cashflow can have a significant impact on their ability to survive. “By supporting our small business customers during this difficult time, we hope we can help as many businesses as possible to get back on an even keel as quickly as possible.”Lloyds was one of the banks to withdraw funding from Carillion, but is now stepping in to support firms affected by that decision. The BBC asked Lloyds whether there was a contradiction in that.The banks withdrew funding from Carillion because of “viability”, said a spokesperson. “There are reasons the Carillion situation happened.” Lloyds had set up the fund for affected companies to ensure the impact of the collapse was “minimal”, he added.’Provide clarity’From next Monday, 250 staff, mainly cleaners and maintenance workers, who were on the Carillion payroll will be be employed directly by Nationwide.The lender will also take over contracts arranged by Carillion, which provide employment for another 1,500 workers.Staff previously employed by Carillion carry out cleaning, maintenance and administrative functions for Nationwide, including in its 700 branches.

The building society said the move to take the jobs in-house would “provide clarity for those affected and ensure that services are maintained”.Carillion also sub-contracted some of its cleaning and maintenance work for Nationwide to a number of other companies. However, Nationwide said it would “now look to deal directly with third-party suppliers that currently support the Carillion contract”. A spokeswoman for the company said it was “too early to say” whether Nationwide would look to outsource the jobs again in the future. Carillion went into liquidation earlier this week, threatening thousands of jobs, about 20,000 of them in the UK. It described itself as an “integrated support services business” and held about 450 governmental contracts, spanning the education, justice, defence and transport ministries.Its failure means the government will have to provide funding to maintain the public services run by Carillion.
Source: BBC News

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