Tuesday 19 May 2020 9:44 am

Bank of England to name recipients of coronavirus loans

The Bank of England has said it will start naming the companies that use its coronavirus lending facility in a bid to increase transparency about which firms are being bailed out.

Firms using the Bank’s covid corporate financing facility (CCFF) will also be expected to start “showing restraint” on dividend payments, share buy-backs and senior pay.

The Bank’s announcement came as the Treasury said it will raise the amount mid-sized companies can borrow through a separate coronavirus loan scheme aimed at mid-sized firms to £200m, up from £50m, next week.

Firms using the Treasury’s coronavirus large business interruption loan scheme (CLBILS) will also be expected to cut back on dividends, share purchases and pay.

The Bank of England’s CCFF is aimed at the UK’s biggest companies. Those that have a good enough credit rating can sell short-term commercial paper – short-dated debt – to the Bank to raise money. So far, £18.8bn has been lent to 55 businesses. 

Up until now, the Bank has not named the firms. However some firms, such as Easyjet, have publicly said they have accessed the scheme. 

Central banks have traditionally been reluctant to name firms using their facilities, fearing the stigma could mean companies do not apply for loans that they need. 

The US Federal Reserve will not name recipients of its commercial paper funding facility. It will name the small and mid-size businesses, states and municipalities that receive loans through its other schemes, however.

The BoE will start publishing a list of firms that have accessed the CCFF and the amount they borrowed every Thursday from 4 June.

“This change will make the scheme more transparent and enable participating businesses to demonstrate their access to the scheme,” the Bank said in a statement.

Fran Boait, executive director of campaign group Positive Money, which has campaigned for greater transparency, said the CCFF “was serving as a secret bailout vehicle, allowing Britain’s biggest corporations to access public money without the public having to know”.

“It is good to see the government and Bank of England responding to public pressure and coming clean on the firms being bailed out with public money.”

The Bank also said that firms “will be expected to provide a letter addressed to HM Treasury that commits to showing restraint on the payment of dividends and other capital distributions and on senior pay during the period in which their commercial paper is outstanding”.