UK banks are warning that up to half of the £18.5bn of bounce back loans could fail and hundreds of thousands of SMBs could fail; banks are also worried that there is a burgeoning PR crisis coming if they were to try and pursue payments; “Some arrangements will have to be made. A lot of them will be written off or converted into something else,” said one bank chairman to the FT. “In most cases the idea of the government taking equity in these companies is unrealistic — they are simply too small. So the question is what’s going to happen to all of these loans?”; there has been discussion of creating a bad bank structure to help absorb the bad loans and remove them from banks’ balance sheets so they can continue to lend through the crisis; allowing so many companies to fail is not something the government will let happen. Financial Times
