Banks start process to claw back billions from Covid loans
Some of Britain’s biggest lenders have begun sending letters to customers, warning them that repayments for crisis loans will soon be expected.
HSBC, Barclays, NatWest and Lloyds have each begun sending letters to customers, the Mail on Sunday first revealed, with the first set repayments due to start in just two weeks.
Banks handed out more than £75bn to 1.6 million firms under a number of emergency support schemes set up by the government to help businesses through the worst of the Covid pandemic.
Businesses were granted an interest-free period of one year on the loans, and are due to start making payments imminently.
Sources warned the Mail on Sunday that banks could be forced to use heavy-handed tactics to recuperate borrowed money.
Banking sources said they were aware that some companies could still be facing severe financial difficulties, with one senior banker warning the paper that small firms may refuse to make repayments because they have mistaken the money for grants or debt that will be written off.
The recent UK lockdown is coming to an end tomorrow, when for the first time in 2021 non-essential businesses like pubs and restaurants will be allowed to open and serve customers, with restrictions in place.
“At the moment the view is you are going to have to pursue [the loans] quite hard, because people might play awkward and think the banks will just forget about it,” said the banker.
“It will get tricky when you get right down to the wire. And will we go legal on this? [The Treasury] hasn’t ruled it out.”