Greensill Debacle Triggers Liquidation Of Italy’s Aigis Banca

The Italian bank Aigis went belly up following the Greensill Capital debacle involving GFG Alliance invoices, Financial Times (FT) reported on Monday (May 24).

Aigis, based in Milan, was a specialty lender for small to medium businesses (SMBs). The Bank of Italy ordered that the lender’s assets and accounts be sold to its competitor Banca Ifis, also a specialty lender for SMBs.

“The intervention of Banca Ifis will protect the savings of retail customers, guarantee continuity of finance to businesses and safeguard jobs,” Banca Ifis CEO Frederik Geertman said in a statement, per FT.

Greensill Capital loans money to suppliers based on the value of their outstanding invoices minus a discount. The loans are then packaged into notes and sold to investors and banks, which reportedly included Sanjeev Gupta’s Aigis (formally known as metals group GFG Alliance).

The Italian bank’s problems were reportedly connected to invoice investment products purchased from Greensill, sources told FT. Some investments included receivables-backed notes connected to Gupta’s GFG.

Greensill’s collapse was in part triggered by Sanjeev Gupta’s GFG Alliance, which depended on Greensill for financing. GFC, a metals conglomerate, defaulted on its debt to Greensill and is now struggling to stay in business, FT reported.

The assets Banca Ifis acquired from Aigis include nearly €300 million (over $366 million) in SMB loans and €440 million (nearly $540 million) in customer deposits.

The U.K.’s Financial Conduct Authority (FCA) opened a probe into Greensill Capital U.K. and Greensill Capital Securities. The watchdog is also looking into Mirabella Advisers, which supervises Greensill Capital Securities.

The collapse of Greensill followed the freezing of $10 billion in investment funds by Credit Suisse Group AG. GAM Holding also froze its own investment connected to Greensill.