Airlines, transport, travel companies, and car manufacturers are the largest recipients of emergency funding from the Bank of England (BoE) in the UK. These short-term loans are disbursed through the Bank’s Coronavirus Corporate Financing Facility and are typically repaid at rates between 0.2 and 0.6%.
Several well-known UK brands have taken loans from the BoE including Rolls-Royce (for £300 million), Marks & Spencer (£260 million), and even football club Tottenham Hotspur’s stadium company (£175 million).
In its report on Thursday, the BoE reported that while the biggest single borrower has been the chemicals giant BASF, with the maximum £1 billion, the airlines are indebted for some hefty sums. British Airways and Wizz Air each borrowed £300 million and Ryan Air and EasyJet received double £600 million.
The ‘Old Lady of Threadneedle Street’ (as the Bank is nicknamed) isn’t going to loan to just anybody. Criteria for the loans include sound financial health before the crisis; the company must make a material contribution to the UK economy and has to be investment-grade rated.
Given the scale of the coronavirus crisis, the Bank isn’t attaching many unusual conditions to the loans. However, the recipients are expected not to award large increases in executive pay and the payment of dividends.
Still, the Old Lady has some spare cash remaining: £16 billion has been paid thus far, and the Bank can lend a further £70 billion if needed.