UK - Banks are reviewing loan arrangements to companies with DB scheme deficits, PricewaterhouseCoopers warns.
And the accounting giant fears the move could cut the credit lines of UK businesses.
The warning follows Moody’s decision to cut defence contractor BAe Systems’ credit rating because of its £2.2bn scheme deficit. Standard & Poor’s has also cut BAe Systems’ rating to triple-B – just one place above junk level.
Industry sources fear banks are now set to follow suit and that many are reviewing their lending arrangements with companies.
PwC and Deloitte & Touche have held discussions with banks about their clients’ schemes, and fear they will raise the interest rates they charge firms or even cut credit lines.
PwC partner Andrew Evans said: “The most significant factor here is that banks may seek to raise the interest rates they charge the organisation. The extreme is if the company is already at the limit of its banking arrangements and facing significant additional funding to its scheme.
“We know that banks do not look favourably at the amount of cash needed for meeting pension promises.
“We are aware of a number of situations where this has arisen, and has led to banks asking more questions on pensions than would normally be the case.”
Deloitte & Touche head of investment services Tony Osborn-Barker agreed and warned if banks do cut companies’ credit lines because of their deficits, it would prompt more firms to follow Maersk’s lead and wind up their scheme.
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