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Bankers to write Tata Steel bailout plans

Lizzy Burden
·2-min read
Tata Steel
Tata Steel

The Treasury has asked investment bankers to devise a rescue plan for Britain’s biggest steel maker after months of discussions about a deal that could save thousands of jobs.

Credit Suisse, along with the management consultancy McKinsey, is to advise on negotiations with Tata Steel, which owns the Port Talbot plant in south Wales that employs 3,500 people.

Banking sources told Sky News Credit Suisse will work on a pro bono basis, ending speculation that Government talks with the Indian industrial conglomerate had finished.

Steel sector insiders said Tata Steel had been about to request a substantial injection of taxpayer funding but officials rejected it because the parent company would have written off equivalent debts without committing much of its own new capital. Long beleaguered Tata employs about 8,000 people in the UK.

Some of Credit Suisse’s most senior bosses have already been enlisted to help the Government amid the economic fallout from Covid-19, having played a central role advising ministers after the financial crash.

Former Credit Suisse banker Charles Donald heads UK Government Investments (UKGI), which oversees Project Birch, the rescue programme for companies seen as structurally important to the UK economy but that have been unable to obtain funding from other sources.

A Government spokesman said: “We remain very supportive of the UK steel sector and its valuable contribution to the UK economy. The Government regularly uses external advice to better understand how to support businesses.”

Tata Steel Europe said: “We are in active discussions with the UK government on several options for the future of our UK operations, including potential co-operation and participation from the Government to create a sustainable decarbonised footprint for the future.

“Given prevailing market conditions and disruption caused by the Covid-19 pandemic, it is clear that our UK operations face structural challenges that need to be urgently addressed. Discussions with the government are constructive and ongoing, and at this stage no decisions have been made.”