Parliament should consider toughening up the rules on who can take control of a bank in light of what happened to Wyelands Bank following the collapse of Greensill Capital, Bank of England Deputy Governor Sam Woods said on Wednesday.
Steel tycoon Sanjeev Gupta’s metals-to-finance empire GFG Alliance took control of Wyelands Bank in 2016. Wyelands financed GFG Alliance that was closely linked to financing company Greensill Capital, which went bust earlier this year.
Concerns emerged in 2018 over the way Wyelands was lending to GFG, Woods said.
“The more we dug the more concerned we became,” Woods told parliament’s Treasury Select Committee.
The Bank alerted the National Crime Agency and the Serious Fraud Office, and conducted a “dawn raid” in December 2019. Wyelands was forced to hand back 210 million pounds of deposits to around 4,000 savers in February this year.
Gupta took over Wyelands under European Union rules which allowed a change in control to proceed unless the regulator has specific grounds for objecting, rules that remain in the UK since Brexit.
The rules should be toughened by putting the “burden of proof” on the person who wants to take control of a bank to show they are suitable, Woods said.
Asked by a lawmaker if Gupta is a ‘fit and proper’ person to have owned a bank, Woods said the BoE has an enforcement investigation which is looking at this issue among others.
“It’s very obviously something we should look into given the way things have played out… That will be an extremely thorough investigation,” Woods said.
Woods, who heads the BoE’s banking supervision arm, said he was still waiting to see where losses from Greensill “will land” but was not concerned about any impact on the banks he regulates.