Carillion’s collapse earlier this year shook the building industry and its failure threatened the future of many small firms that supplied the contractor.
However, trade paper Construction News reports that banks have seen relatively few firms approach them for financial assistance in the three months since Carillion entered compulsory liquidation on January 15.
CN says that it saw an analysis by banking trade body UK Finance that shows requests for credit from Carillion-affected firms have been “limited” and “subdued”, with one bank seeing just 18 firms using specially allocated support.
HSBC, Lloyds and Royal Bank of Scotland (RBS) quickly responded to Carillion’s demise, making available a total of £225 million for affected suppliers although Lloyds has said that the majority of its SME customers have demonstrated the “resilience to cope”
Santander created a £75 million Carillion fund, Barclays offered increased overdrafts and help with cashflow, while Co-op, One Savings Bank and TSB while set up helplines and support services.
UK Finance’s analysis details the uptake of support offered by five unnamed banks. One of the five has seen only 18 of its customers approach it for help since January, with the reported value of support coming to less than £1.5 million.
The same bank identified 53 of its customers as potentially at risk following the liquidation, 41 reported no issues, nine said the impact was tolerable, and three highlighted significant problems.
Of the other four banks analysed by UK Finance, one has provided help to 21 companies, through waiving overdraft fees, providing loans and putting in place financing arrangements for impacted firms at a cost of £1.79 million. Another, which reported “subdued demand” for Carillion-related support, has provided only £117,000 in support to customers since the collapse.
Of the five banks analysed, the one that has given support to the highest number of firms has approved 73 applications for assistance to date.
The relatively low response rate contrasts with an estimated 13,500 firms that had business links with Carillion when it was still solvent. The group’s liabilities were reported as being nearly £7 billion when it entered liquidation, a figure that included borrowings owed to banks, money owed to Carillion’s pension funds, and debts owed to the group’s trade creditors.
According to UK Finance, it could take a further four to eight weeks before the full impact of Carillion’s collapse works its way through the supply chain.
UK Finance, which represents nearly 300 investment, banking and payment services firms, said the low numbers came despite banks proactively engaging with affected customers and more support streams being created. A spokeswoman said: “UK banks have worked closely with the government to support businesses impacted by the liquidation of Carillion and help those facing temporary cashflow issues access the finance they need.
“So far take-up for the various funding schemes has been fairly low, despite significant activity by banks to contact those firms affected.
“That is why it’s crucial that we carry on closely monitoring the situation, raising awareness of the support available and keeping lines of communication with the affected businesses open.”