Britain's financial watchdog formally investigates Greensill

By Reuters

<p><body> <p>By Huw Jones</p> <p><span class="caps">LONDON</span> (Reuters) – Britain’s Financial Conduct Authority said on Tuesday it was formally investigating the UK operations of collapsed supply chain finance company Greensill as part of global probes.</p> <p>“We are also cooperating with counterparts in other UK enforcement and regulatory agencies, as well as authorities in a number of overseas jurisdictions,” <span class="caps">FCA</span> <span class="caps">CEO</span> Nikhil Rathi said in a letter to parliament’s Treasury Select Committee.</p> <p>Greensill Capital lent money to firms by buying their invoices at a discount, but it collapsed in March 2021 after insurers pulled their cover. Among the investors burnt in the widespread fallout included clients of Swiss banking giant Credit Suisse, steel magnate Sanjeev Gupta’s <span class="caps">GFG</span> Alliance and some 26 German towns.</p> <p>Lawmakers have opened an inquiry into lessons from Greensill’s implosion and later on Tuesday will meet with the company’s founder Lex Greensill in a public hearing. Rathi will appear before the committee on Wednesday.</p> <p>The <span class="caps">FCA</span> is investigating matters relating to Greensill Capital UK, Greensill Capital Securities and the oversight of the latter by its principal, Mirabella Advisers <span class="caps">LLP</span>, Rathi said.</p> <p>“We are also cooperating with counterparts in other UK enforcement and regulatory agencies, as well as authorities in a number of overseas jurisdictions,” Rathi said.</p> <p>The <span class="caps">FCA</span> said it was only responsible for supervising how Greensill Capital UK complied with anti-money laundering (<span class="caps">AML</span>)safeguards.</p> <p>“The wider activities that <span class="caps">GCUK</span> undertook were not regulated by the <span class="caps">FCA</span>….and the origination of a supply-chain finance instrument is not a regulated activity,” Rathi said.</p> <p>To help with the “smooth functioning” of the administration of Greensill, the <span class="caps">FCA</span> has decided that for now it won’t cancel the firm’s registration for <span class="caps">AML</span> compliance.</p> <p>“We agree with the Bank of England’s assessment that the Greensill entities were not systemically important for the purposes of UK financial stability,” Rathi said.</p> <p>“<span class="caps">GCUK</span> was not regulated by the <span class="caps">FCA</span> to conduct regulated activities and, in line with the Bank’s assessment of Greensill, no specific analysis was done for reasons other than direct supervision.” </p> <p/> <p> (Reporting by Huw Jones, editing by Louise Heavens and Carmel Crimmins)</p> </body></p>