The lending methods of Wyelands Bank Plc, a UK challenger bank and asset finance provider, have “come under regulatory scrutiny” according to a report by the Financial Times, published 24 February.
The FT said the London-based lender, established in 2016 by British entrepreneur Sanjeev Gupta, is under review by the Prudential Regulation Authority (PRA) over the extent of its funding to GFG Alliance, a business founded and owned by the Gupta family.
Wyelands Bank, a member of the GFG Alliance, is described on the GFG website as “an independently owned and managed British bank focused on global trade.”
GFG Alliance manages global revenues of over US$20bn and employs more than 30,000 staff, according to the GFG Alliance website.
The FT investigation, which draws on interviews from former GFG employees, internal documents and UK company filings, has identified 19 companies that entered into transactions with Wyelands for funding that may see the bank exceed its permissible lending limits to affiliated companies and individuals.
Under UK financial regulations, there is a 25% limit on how much a bank can lend of its core capital to related parties.
A spokesman for GFG Alliance told Leasing Life: “Wyelands Bank was purchased and built on the explicit basis that it would do business with GFG Alliance, and that GFG would use its network to introduce new clients to the bank. That plan was made abundantly clear to customers, depositors, investors and to regulatory authorities. It was set out in Wyelands Bank’s regulated business plan and in its annual report.
“All investors are assessed and cleared for suitability by Wyelands Bank’s internal processes, which operate independently of GFG. Transactions between Wyelands and GFG are on clear commercial terms and have produced a return both for Wyelands depositors and for the bank itself.
“Among the new clients introduced to Wyelands are business associates, contacts, friends and former colleagues of Sanjeev Gupta. There is no secret about this – GFG frequently does business with trusted acquaintances and friends who go back a long way and is proud of doing so.
“Notwithstanding this, GFG Alliance is reviewing the terms of its relationship with Wyelands Bank in order to ensure that all dealings continue to conform to the highest standards of transparency and governance. GFG Alliance’s purpose in all it does is to safeguard industrial jobs and to pursue a vision of sustainable, environmentally responsible steel, aluminium and renewable energy production.”
Indeed, in its most recent financial statement, Weylands Bank said: “the bank continues to benefit from introductions from the GFG Alliance.”
However, GFG Alliance did not respond to our specific request to address the allegation that proper disclosures had not been followed nor did it confirm that it was being questioned or investigated by the bank regulator.
The Bank of England and the Prudential Regulation Authority said it did not comment on individual cases.
According to Wyelands Bank Plc’s financial statement, for the year ended 30 April 2019, the bank took £726m in customer deposits. Wyelands saw new business volumes nearing £1bn for the first time and lending asset balances of £434m, or approximately 44% growth year-on-year, the bank reported.
The bank added that over the past year it has continued to develop new business streams through trade finance, asset-based lending and asset finance to third parties, targeting specific industries: commodities, aerospace, automotive, energy, steel and aluminium, and the food and beverage sectors.