Guy Hands: West faces zero growth unless bad debts are written off

THE private equity industry is on a collision course with the banks amid calls for hundreds of billions in leveraged loans to be restructured to avoid Japanese-style economic stagnation.<br /><br />Outspoken private equity boss Guy Hands yesterday accused banks &ndash; particularly the bailed out institutions &ndash; of failing to act on bad debts to avoid admitting to yet more multi-billion pound losses.<br /><br />He said their government masters should step in to demand balance sheets are cleaned out and refinancings pushed through.<br /><br />Hands estimates there are &pound;7,000bn in leveraged loans, including property loans, due to mature by 2014.<br /><br />Hands, who is locked in a fight with Citigroup over the restructuring of &pound;2.6bn in loans to his EMI music group, warned Britain and the US faced zero growth if there was no action to write off debts and refinance company loans in the new economic environment.<br /><br />Hands said: &ldquo;Unless the banks address this problem you will end up with the Japanese problem. Japan could afford no growth because of its declining population, but it is not an option for the UK and America.&rdquo; <br /><br />He appears to have the support of the private equity sector. The British Private Equity and Venture Capital Association (BPEVCA) has been holding meetings with the major banks to lobby on behalf of its members for loan relief.<br /><br />The BPEVCA declined to comment but it is understood to be concerned banks are dragging their heels.