UK financial watchdog officially investigates Greensill by Reuters

© Reuters.

By Huw Jones

LONDON (Reuters) – Britain’s Financial Conduct Authority said on Tuesday it was formally investigating UK operations of the collapse of supply chain finance firm Greensill in global polls.

“We are also cooperating with our counterparts in other UK enforcement and regulatory agencies, as well as with authorities in a number of foreign jurisdictions,” FCA CEO Nikhil Rathi said in a letter addressed to the parliamentary treasury committee.

Greensill Capital loaned companies money by buying their bills at a discount, but it collapsed in March 2021 after insurers pulled their coverage. Investors burned by the widespread fallout included clients of the Swiss banking giant Swiss credit (SIX :), the GFG Alliance of steel magnate Sanjeev Gupta and some 26 German cities.

Lawmakers have opened an investigation into the lessons of Greensill’s implosion and later on Tuesday they will meet with company founder Lex Greensill at a public hearing. Rathi will appear before the committee on Wednesday.

The FCA is investigating matters relating to Greensill Capital UK, Greensill Capital Securities and the oversight of the latter by its principal, Mirabella Advisers LLP, Rathi said.

“We are also cooperating with our counterparts in other UK enforcement and regulatory agencies, as well as with authorities in a number of foreign jurisdictions,” said Rathi.

The FCA said it was solely responsible for overseeing how Greensill Capital UK complied with anti-money laundering (AML) safeguards.

“The broader activities undertaken by GCUK were not regulated by the FCA … and the creation of a supply chain finance instrument is not a regulated activity,” said Rathi.

To help the administration of Greensill “run smoothly”, the FCA has decided that at this time it will not revoke the company’s registration for AML compliance.

“We agree with the Bank of England’s assessment that the Greensill entities were not systemically important for the purposes of UK financial stability,” said Rathi.

“GCUK was not regulated by the FCA to conduct regulated activities and, in accordance with the Bank’s assessment of Greensill, no specific analysis was performed for reasons other than direct supervision.”

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