Photo by Terry Robinson via Wikimedia Commons
According to some reports, banks from the United Kingdom and overseas experience a £2bn hit from the collapse of Carillion, the construction and outsourcing company.
Sky News reported that the total bill for the banks would be nearly double the £900m headline debt figure for the group.
The British lenders included HSBC, Barclays, Santander UK, and Lloyds Banking Group as well as some companies that are overseas.
The banks were urged to extend a £20m lifeline to the stricken constructor to keep the company going another week.However, the lack of support from the government meant that any deal fell through.
Sky News reported that Carillion required short-term funding amounting to £300m in order to survive. However, its bankers were hesitant to commit to any lending without government support.
The collapse of Carillion came after last-gasp discussions with the government failed to look for a solution over the weekend.
It arrived after a series of profit warnings from the construction company, following a catastrophic write-down on contracts amounting to £845m that was announced in July.
Some analysts are set to closely scrutinise results of UK banks in search of any impairments that were taken on loans to Carillion. The head of UK banks research at stockbrokers Goodbody, John Cronin, said that the said collapse of Carillion “begs the question” as to whether Barclays will be required to take a write-down in its upcoming results, even though no public information on individual loan exposure is currently available.
Barclays refused to comment regarding the matter.