The Treasury is said to be preparing to take emergency stakes in companies that are at risk of collapse due to the coronavirus outbreak.
Whitehall officials have approached a top City figure to assemble a so-called bailout taskforce that would pump funds into potential casualties of the pandemic in exchange for equity stakes, the Sunday Telegraph reported.
The City stalwart, who has worked with the government before, is expected to bring in a crack team of investment bankers to thrash out deals.
One option under consideration for critical sectors — such as airlines and specialist manufacturers — are loans that convert to equity stakes if not repaid within a set time period, according to the report.
The government could alternatively underwrite rights issues, taking shares in the companies if they are unable to raise funds from the market.
“This is work all night, sophisticated stuff, and as and when it moves it will have to move incredibly quickly. In three or four weeks’ time they will be deluged,” a City source told the newspaper.
The insider added that the project would be carried out “very quietly”.
“This is going to be bloody hard work, it’s not a sinecure. There will be a lot of pressure, and stewards’ inquiries afterwards.”
The strategy mirrors measures taken after the 2008 financial crash to pump capital back into banks on the brink of collapse.
Those discussions were led by Sir John Kingman — then a senior Treasury official and now chairman of insurer Legal & General.
Last week Rain Newton-Smith, CBI chief economist, raised the possibility of government stakes for the “stranded middle” businesses that were not eligible for the coronavirus support package but were at risk of going bust.
The Treasury declined to comment.