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Belgium’s reckoning with a brutal history in Congo

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The cleaners who came for King Leopold II in Brussels this July knew what to do. Many times over the past few years, they have used chemicals to dissolve words such as “assassin”, “racist” and “murderer” scrawled across the statue on the Place du Trône. As before, they removed the blood-red paint protesters had dumped on his hands. But this time they missed a spot: the fingertips and palm of his curled right hand were still crimson.

As protests following the killing of George Floyd in the US reverberated around the world this summer, Belgium, like many other countries, experienced its own reckoning: with a brutal colonial past, with the systemic racism that inhibits its black citizens today and with the question of what exactly it owes to the Democratic Republic of Congo, which it exploited for 75 years.

With thousands taking to the streets to protest police brutality, racial profiling and racism, Belgium’s leaders came under pressure to respond. In a June 30 letter to DRC President Felix Tshisekedi on the 60th anniversary of the country’s independence, King Philippe for the first time expressed his “deepest regrets” for the “acts of violence and cruelty” committed by Belgium and linked that period to racism today. If not quite an apology, it was a big step for an institution that was still celebrating bringing its civilising mission to Congo not long ago. That same month, Belgium’s parliament launched a truth, reconciliation and — crucially — reparations commission to examine its plunder of Congo under Leopold II and the following half-century of colonialism.

Still the demonstrators rallied, tearing down statues of the bearded, barbarous former king. But the one next to the royal palace remains standing. When the penniless Leopold enlisted the imperialist explorer Henry Morton Stanley to conquer a swath of central Africa 80 times the size of his kingdom in 1885, he did so to extract rubber and ivory. Cast in 1926, the equestrian statue is a monument to a reign that killed millions of Congolese even as it brought Belgium great wealth — and an emblem of the wilful national amnesia that overtook the country in the ensuing decades, which some are now trying to address.

Demonstrators stand on a statue of King Leopold II in Brussels in June this year. It was under Leopold’s rule (1865-1909) that Belgium began its exploitation of Congo’s people and rich mineral reserves
Demonstrators stand on a statue of King Leopold II in Brussels in June this year. It was under Leopold’s rule (1865-1909) that Belgium began its exploitation of Congo’s people and rich mineral reserves © Alamy

It is also literally a piece of Congo. A faded green plaque at the back of the base speaks of another kind of reckoning, which Belgium, and most of the west, is yet to have. “The copper and tin of this statue come from the Belgian Congo,” it reads in curved French script, stamped in warm, aged copper patina. “They were donated by the Union Minière du Haut-Katanga.”


The Union Minière runs like a copper seam through Belgian colonialism and the country’s contemporary relationship with that period. In 1906, Leopold II created L’Union Minière du Haut-Katanga (UMHK) along with a diamond-mining business and railway company to exploit Congo’s mineral resources. Those minerals helped to build the Belgian economy and its cities, to accelerate its industrialisation and to enrich its royal family. They also became, as with the statue on Place du Trône, the very means through which Belgium celebrated itself, in scores of bronze-and-tin tributes to its mission civilisatrice.

In 1912, Union Minière began ripping high-grade copper out of the Kalukuluku mine. The company, which was part owned by a British group, was the world’s largest copper producer by 1929, the largest producer of cobalt by the 1960s. By then, UMHK generated half of Congo’s revenues and 70 per cent of its exports. When America’s atomic bombs fell on Japan, they were fuelled by Congolese uranium extracted by Union Minière.

The company became so powerful it was known as “a state within a state”. By 1961, its dominion spread over 7,000 square miles. It was in charge of its employees’ lives from birth to death, schooling their children, who then became workers themselves. Up to a quarter of a million men were forcibly “pressed into its service” during the first 30 years of UMHK’s existence, according to historian John Higginson. The forced rural exodus transformed Congo’s agricultural production for ever.

“Belgium, and Belgian people, have to admit that if they are rich now . . . it’s because they took the money [from] somewhere — and it’s not just that they took the money, they really colonised the whole population, a whole territory, with violence,” says Anne Wetsi Mpoma, an activist and art curator who has been asked to advise the new parliamentary commission as a member of the Congolese diaspora.

Belgium was already a major industrial power by the late 19th century but its economy was immeasurably improved by the capture of Congo, says Pierre Kompany, Belgium’s most prominent politician of Congolese descent. The port of Antwerp grew to become the world’s second busiest after Liverpool, first because of Congolese rubber and ivory shipments and then because of the UMHK minerals. According to a 2007 survey, nine of the 23 richest Belgian families could trace their fortunes to colonial Congo.

Belgium’s economy was immeasurably improved by the capture of Congo, says Pierre Kompany, Belgium’s most prominent politician of Congolese descent
Belgium’s economy was immeasurably improved by the capture of Congo, says Pierre Kompany, Belgium’s most prominent politician of Congolese descent © John Thys/AFP via Getty Images

Meanwhile, Leopold II spent so much on public works, including Brussels’ grand Arcade du Cinquantenaire, that he earned the nickname the “builder king”. Kompany advocates for closer, equitable ties rather than reparations, but he too is clear that Belgium must fully acknowledge its legacy. “Everyone should know from where he got his money,” he says. “If Belgium didn’t meet Congo, Belgium wouldn’t be what it is today.”

UMHK itself was the biggest part of the conglomerate Société Générale de Belgique, which at one point controlled 70 per cent of Congo’s economy. Pieces of SGB have subsequently found their way into BNP Paribas Fortis bank and the French energy giant Engie. Lufthansa’s Brussels Airlines started as the state-owned carrier servicing Belgian interests in central Africa. The mounted statue of Leopold in the centre of Brussels faces the glass-and-steel offices of ING Belgium, originally the king’s personal banker, Banque Lambert. The British-Dutch Unilever’s roots stretch back to Huileries du Congo Belge, where, as at UMHK, forced labourers were whipped with the chicotte — made from dried, twisted hippo hide — and had their wives and children kidnapped if they refused to work. The corporate timeline on the company’s website includes no mention of this.

Such debts are hard to quantify. But as the global conversation around racism has turned toward colonialism, the issue of recompense is foremost for many activists and politicians. Days after the Belgian king’s letter, Congolese human rights minister Andre Lite told local media his government would continue to push for reparations. “The regrets of certain Belgian officials will never be enough in the face of their obligation to grant reparations to the victims of colonisation and their relatives,” he said.

It is clear the repercussions of colonialism impact the lives of people of African descent in the west as well. A 2017 study of the 110,000 Belgo-Congolese, -Rwandans and -Burundians found that more than 60 per cent said they experienced discrimination — in housing, education and employment — while 86 per cent said they believed they were “perceived” as foreigners. That partly comes down to education in schools. “It needs to be mandatory to have a full lesson to talk about colonialism,” says Tracy Bibo-Tansia, a Belgian activist of Congolese descent. “We have to change the dialogue. The statues are symbolic . . . but the structural racism is the thing that we need to tackle.”

Crimson paint stains the hands of the defaced statue of King Leopold II in Brussels. In June, current monarch Philippe expressed ‘deepest regrets’ and linked colonialism to racism today
Crimson paint stains the hands of the defaced statue of King Leopold II in Brussels. In June, current monarch Philippe expressed ‘deepest regrets’ and linked colonialism to racism today © Dursun Aydemir/Anadolu Agency via Getty Images

This process won’t be easy. In a recent University of Antwerp survey, half said Belgium had done more good than bad in Congo. A UN human rights panel put it bluntly, urging Belgium to recognise the true scope of the violence and injustice of its colonial past in order to tackle the root causes of present-day racism faced by people of African descent. “Closing the dark chapter in history, and reconciliation and healing, requires that Belgians should finally confront, and acknowledge, King Leopold II’s and Belgium’s role in colonisation and its long-term impact on Belgium and Africa,” it said.


Few companies have ever atoned for their colonial pasts, let alone paid reparations. By contrast, in the late 1990s, Swiss banks and German companies including Siemens and BMW did both for their involvement in the Holocaust. “That’s fairly typical in the low degree of interest in what went down in business in Africa,” says Geoffrey Jones, a professor at Harvard Business School. But “European and western companies have to understand that African problems are largely the result of historical western interference.”

This summer, I visited an old paper warehouse near central Brussels where UMHK’s papers are stored in one of the state archives’ depots. I requested boxes that contained letters cited in the Belgian parliament’s 2000-01 commission on the assassination of Congo’s first prime minister Patrice Lumumba in 1961. I also dug out a master’s thesis written by Jeroen Laporte, now a UN Development Programme analyst, who spent two years poring over the company’s papers.

The correspondence shows how UMHK’s management was, like most of the Belgian elite, firmly against Congo’s independence. In 1957, its longtime Africa director Jules Cousin wrote fearfully of the asset seizures in the Russian and Chinese revolutions and a recent string of independences in north Africa. “All we can hope for is to delay [independence] for 20 or 25 years and I doubt we can hope for more, as the Russians will intervene more and more to ‘liberate’ the African people.”

UMHK spent millions funding political parties, newspapers, intelligence agencies and propaganda to slow the march of independence and of communism. But executives also discussed turning copper-rich Katanga, which they effectively controlled, into a South Africa-style apartheid state. In the months leading up to independence on June 30 1960, Lumumba constantly cropped up in the managers’ correspondence. He was a “communist” puppet who would nationalise Union Minière; he was, per one unsigned confidential letter from January 1960, “Ho Chi Minh . . . and will give us a hard time in the months to come”. In a September 1960 telegram, UMHK’s Louis Wallef wrote to a colleague about the need for “someone” — clearly Lumumba — to “disappear”.

Patrice Lumumba (left) became Congo’s first prime minister after it gained independence in June 1960
Patrice Lumumba (left) became Congo’s first prime minister after it gained independence in June 1960 © Dominique Berretty/Gamma-Rapho via Getty Images
Lumumba is captured in December 1960. Union Minière was described as an ‘essential economic actor’ in the events surrounding his assassination
Lumumba is captured in December 1960. Union Minière was described as an ‘essential economic actor’ in the events surrounding his assassination © Universal History Archive/Universal Images Group via Getty Images

But it was actually Lumumba’s name that disappeared from the correspondence. Ten weeks after independence, he was overthrown in a CIA-backed coup; three months later, he was handed over to the UMHK-backed secessionists who, on January 17 1961, killed him, in the presence of Belgian officials. Laporte says: “[UMHK executives] sent a lot — a lot — of correspondence, which was amazingly open, the way they discussed politics . . . And the thing about Lumumba is they did mention him a lot, especially by the end of the 1950s. But in the letters they were writing in January 1961, when Lumumba was assassinated, there’s nothing there and also afterwards I can’t find any comment on the death of a very important political leader, which seemed strange to me.”

The day after Katanga declared independence on July 11 with UMHK backing, Union Minière management announced that they would advance BFr1.25bn in taxes owed to Congo to the breakaway province instead. The move starved the newly independent Congo of revenue.

In a December 1963 letter to UN secretary-general U Thant, Ghana’s first president Kwame Nkrumah was blunt: “Lumumba was not killed because he was thought to be a communist, but because he was a nationalist leader threatening the monopolies of the Union Minière.” The Lumumba commission’s report dedicates an entire section to the company’s role as “the essential economic actor” in the events surrounding the assassination, which destabilised Congo for years. “However, we have not uncovered any documentary evidence directly or indirectly implicating Union Minière in the actual assassination of Lumumba on January 17.”

That commission was sparked by Ludo de Witte’s 1999 book The Assassination of Lumumba. In it, he details the political machinations in Washington, the UN, Brussels and Congo that led to Lumumba’s grisly murder and a cover-up that saw his body hacked into pieces by Belgian officers before being dissolved in a 200-litre barrel of sulphuric acid that, he writes, “came from the Union Minière”. One of the officers kept a tooth as a trophy. In September, spurred by the post-Floyd reckoning, a Belgian court cleared the way for the tooth to be returned to Lumumba’s family in DRC.

The addition of reparations to the latest parliamentary commission, originally a truth and reconciliation commission, was also the influence of black Belgian activists. “The king has recognised that colonisation had a negative impact on the Congolese people . . . He has to apologise because we know where his money came from,” says Bibo-Tansia, who is an advising expert to the commission. “And then you have reparations . . . it’s important, for Congolese in Congo, to see which area of society didn’t move forward because of colonisation.”

Belgium has resisted the idea of reparations at the highest levels. In an interview with broadcaster VRT this summer, Alexander De Croo, who last month became prime minister, said: “My experience is that you cannot bring a country out of extreme poverty with a bag of money.” (Belgium has a GDP of €530bn. It spent €1.95bn on foreign aid last year, of which €86.2m went to DRC.) But Wouter de Vriendt, the Green party member chairing the forthcoming parliamentary commission, told me it would explore “the role of certain firms in the exploitation and the abuse of Congo and also to investigate which persons, firms or maybe institutions benefited from those financial flows”.

“I’ve been to the mines,” says Bibo-Tansia, who has worked for an NGO in eastern DRC. “I hope the commission will interview all of these big companies.”

De Croo’s coalition government expressed support for the Congo commission’s work and “keep[ing] the past alive” in the 84-page policy document that accompanied its formation on September 30. Karl Lagatie, a spokesman for the foreign ministry, says the government takes “this reckoning … very, very seriously” and “awaits the recommendations of the Congo commission”, which has begun its work. 

“Dealing with the past…is a long and complex process, so it requires nuance and depth,” he says. “It must be something collective, so for this it’s important that it’s a transparent dialogue where all voices are heard and of course the ultimate goal is to give this colonial past an appropriate place in our society, obviously for what happened in the past, but also it is the belief of the government that facing the past will make it possible to build a common future with mutual respect.”


Belgium’s departure from Congo was as extractive as the preceding 75 years. One of the last decisions taken by Belgian Congo’s white-ruled parliament was to allow Congo-registered companies to become Belgian virtually overnight, ensuring their assets and equity were domiciled far from the independent state. Congo became liable for billions of francs in debts accrued by the colonial government.

The directors of Union Minière orchestrated a deal in which the majority of its shares would remain in Belgian (and British) hands, thereby depriving the Congolese government of control of the country’s most important assets. Profit margins for Belgian Congo companies ranged from 15 to 40 per cent, according to a study by University of Antwerp Professor Frans Buelens, which found that they were among the most profitable companies in the world.

A Union Minière copper and cobalt mine in 1953. The company, which was part owned by a British group, was the world’s largest copper producer by 1929, the largest producer of cobalt by the 1960s
A Union Minière copper and cobalt mine in 1953. The company, which was part owned by a British group, was the world’s largest copper producer by 1929, the largest producer of cobalt by the 1960s © Dmitri Kessel/The Life Picture Collection via Getty Images

The Congo crisis had crippled the country. But UMHK’s profits and production soared. The nationalisation it had feared from Lumumba finally came in 1967 from the dictator who had deposed him, Mobutu Sese Seko, but Belgium and UMHK again proved reluctant to loosen their grip, organising an international boycott of Congolese copper that effectively shut down the country’s exports.

Eventually, a compromise was reached: Congo would own the mines but UMHK would manage and operate them via a new entity. In his book La Belgique et Le Congo 1885-1980, historian Guy Vanthemsche quotes an internal UMHK document, which calls the commission the company would receive for selling Congo’s copper “an exorbitant price for the execution of a simple management agreement”.

“The whole operation of the nationalisation of the Union Minière was… like puppet play,” Vanthemsche tells me. “And, in fact, the Union Minière didn’t suffer financial loss through the nationalisation. On the contrary, they made quite a good deal out of it.”


About a mile from Brussels’ Palais Royal, the headquarters of Umicore, an €8.4bn global chemicals, materials and recycling conglomerate, are marked only by a flag bearing the company’s name. Umicore’s slogan is “Materials for a better life”. It recycles rechargeable batteries, refines cobalt that ends up in Teslas and produces something called germanium wafers that go in solar panels. Little about the building or the company’s website — which features diverse people holding beakers up to the light and a short entry on its “African heritage” — suggests that Umicore had, in part, begun its life as L’Union Minière du Haut-Katanga.

In 2006, Umicore published what it called a “frank and full account of its history”. In his foreword, chairman Thomas Leysen notes that while the company’s history is full of “periods of great success”, it also reveals “certain behaviours and attitudes of the past [which] no longer fit with our current values”. The book covers those behaviours — forced labour, selling uranium to the Nazis, supporting Katanga’s secession — but it is largely a story of triumph.

When I speak to Leysen on a video call, he first explains how the Union Minière that emerged years after nationalisation and became Umicore was legally a newly founded company, albeit with the same name and managing some of the same assets. “But clearly there’s affiliation, there’s a history and so we consider it as indeed part of the history,” he says. Citing the Lumumba commission, he says: “We have always tried to co-operate with historians.”

I ask him whether, like Belgium, Umicore has plans to more directly address its colonial history. “Well, we did that quite some time ago,” he says, pointing to how the company had donated its archives to the Belgian state. “I think we have seen [it] always as . . . proper that we were open to historical study, that we acknowledge the fact that we have that affiliation with the old Union Minière and that therefore the materials that we have in our possession are open to historical research.”

A Black Lives Matter protest in Brussels on June 23. Activist Tracy Bibo-Tansia says, ‘The statues are symbolic . . . but the structural racism is the thing that we need to tackle’
A Black Lives Matter protest in Brussels on June 23. Activist Tracy Bibo-Tansia says, ‘The statues are symbolic . . . but the structural racism is the thing that we need to tackle’ © Kenzo Tribouillard/AFP via Getty Images

Some activists argue that, legalities aside, companies such as Umicore would not be what they are without their exploitation of Congo. Assets may be sold or stripped, companies may be merged or divested, but if this dark chapter forms part of a company’s foundation, it must be accounted for pecuniarily. Leysen wouldn’t be drawn. “Our company today is not the company that was active in the Congo. So, we are a different company that has taken over some of these assets, but not the complete assets because they were nationalised before the new Union Minière was founded. So in our case, I think that does not apply.”

I ask what he thinks about reparations. “It’s a difficult concept from a legal and from a moral point of view, especially for things that are 60 years in the past,” he says. “In our case, there is in any case the fact that we are not the direct descendant of the company that operated in the Congo . . . so I think what we try to do is take our responsibility today seriously and be open about the aspects of the past as we discussed.”

Like other Belgians I spoke to, Leysen says he didn’t learn much about his country’s exploitation of Congo when he was growing up in the 1960s and 1970s. “I think there wasn’t a totally shared narrative in this country or totally shared understanding of this past,” he says. “The issue is getting more and more attention, and I think we will all emerge wiser for it — I hope so at least.”

Umicore has not made a statement about its past in light of the current moment Belgium finds itself in and has no plans to. When I ask, Leysen points again to the 2006 book. Joëlle Sambi Nzeba, spokeswoman for the Belgian Network for Black Lives, says that this kind of silence inhibits Belgium’s ability to truly atone. “There’s no way we can talk about reconciling, forgiving, if we don’t talk about where the money went, who actually benefited from the colonisation of the Congo,” she tells me. “The reason you have a loud silence from the company is that it’s very sensitive, when you start talking about money — it’s like, ‘These people not only want to be recognised as victims of colonialism but they also want us to pay for it.’”

A large piece of malachite (a copper carbonate hydroxide mineral) in Brussels’ Royal Museum of Central Africa
A large piece of malachite (a copper carbonate hydroxide mineral) in Brussels’ Royal Museum of Central Africa © Fabien Silvestre Suzor
Sculpture by Congolese artist Freddy Tsimba, outside the Royal Museum of Central Africa
Sculpture by Congolese artist Freddy Tsimba, outside the Royal Museum of Central Africa © Fabien Silvestre Suzor

Harvard’s Jones says reparations are a complicated issue but that an important first step would be companies publicly acknowledging their past sins. “It wasn’t the directors or shareholders at the present company that were responsible — but they’re the inheritors of a past company which was,” he says. “And they have a kind of responsibility to recognise it and to come out publicly and talk about it . . . because it’s important to do better in the future.”

That means training new employees with this dirty history in mind. A spokeswoman for Umicore says a short version of its history is used in new employee training. Much like the Belgian education system, she says, “the approach may differ a bit from site to site”.

The Union Minière that existed in Congo after nationalisation in 1967 became the state-owned miner Gécamines. It has been the subject of corruption allegations, involving deals worth hundreds of millions of dollars with the likes of US-sanctioned Israeli billionaire Dan Gertler and Swiss mining giant Glencore, which all parties deny. Last May, Umicore also struck a deal with Glencore to buy sustainable cobalt mined in Katanga.

“I think history is an extremely dangerous thing,” says Jones. “Airbrushing bad things away is not a way to have a better future. We keep repeating the same old stuff, and Africa is full of that.”


Union Minière is a microcosm for what the writer Adam Hochschild called, in his 1998 book King Leopold’s Ghost, Belgium’s “great forgetting”. Hochschild recently wrote in The Atlantic magazine how, for more than a century after it opened in 1910 as the Musée du Congo Belge, the Royal Museum for Central Africa outside Brussels glorified Belgium’s good deeds in Congo: “It was as if a museum of Jewish life in Berlin made no reference to the Holocaust.” Originally conceived for the 1897 World’s Fair, its first exhibit was 267 Congolese shipped in to live in a human zoo.

Anne Wetsi Mpoma, activist and art curator, has been asked to advise the new parliamentary commission. ‘We have to face the truth with real facts and numbers. At some point those terrible questions have to be addressed,’ she says
Anne Wetsi Mpoma, activist and art curator, has been asked to advise the new parliamentary commission. ‘We have to face the truth with real facts and numbers. At some point those terrible questions have to be addressed,’ she says © Fabien Silvestre Suzor

In 2013, the museum announced what would become a €66.5m renovation. The results were impressive, but the elephant in the room — colonialism — is mostly confined to one large hall. Anne Wetsi Mpoma, who was one of six members of the African diaspora asked to advise on the decolonisation aspects of the renovation, tells me the consultations encapsulated much of the push-pull surrounding Belgium’s tentative reckoning with its past: “The whole process was such a mess.”

Umicore is one of the sponsors of the museum. Leysen told me that like others — including American Express and KBC Bank (which also operated in Congo) — the company had no say in its content. Still, I was curious how the most important company in a colony run purely for profit would be treated in the revamped museum. Walking through the galleries, I didn’t see much of UMHK. The “mineral cabinet” was an almost purely scientific room featuring an array of quartz, iron, gold, uranium, cobalt and — most prominently — copper, minerals UMHK had virtual monopolies on.

In the colonial hall, which does not flinch from the sadism of Belgian rule, spiked handcuffs, chicotte and all, I found a single reference to UMHK in a four-sentence paragraph on the Société Générale de Belgique. I went back through the resource room and found a display case I’d missed on my first lap. There sat a small art deco box — its faded brass plate read: “Union Minière du Haut-Katanga, Elizabethville Juillet 1928”. The opposite case held a period map of Union Minière’s concessions and a small statue of an African man in a smith’s apron. Like much of Belgium’s recognition of its colonial past, it felt rather inadequate.

Later I ask Wetsi Mpoma if, given her experience at the museum, she has any expectations for the Congo commission she has been asked to join. “I hope this violence and the profits that Belgium made in the Congo will also be recognised because I think it will allow us to open the door to the reparations process,” she says. “You have to understand what it is like growing up a Congolese person here in Belgium . . . with all these white Belgian people living these really comfortable lives, and then realising that these comfortable lives come from the money their families made in the Congo.”

Interior of the recently renovated Royal Museum for Central Africa
Interior of the recently renovated Royal Museum for Central Africa © Fabien Silvestre Suzor

Should those companies that benefited pay reparations? “Of course. Though maybe that is for a researcher or the commission to say . . . But we cannot let it go like it’s OK . . . We have to face the truth with real facts and numbers. At some point those terrible questions have to be addressed.

“I want to walk in the streets as a respected citizen of this country and of this world,” she says. “I want that — it has to happen.”

Neil Munshi is the FT’s West Africa bureau chief

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Europe

Italy raises €8.5bn in Europe’s biggest-ever green bond debut

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Investors flocked to Italy’s inaugural environment-focused government bond offering on Wednesday, allowing the country to raise more than €8bn.

The banks running the issuance chalked up around €80bn in orders for €8.5bn of debt. It was the biggest debut sovereign green bond from a European issuer to date, according to Intesa Sanpaolo, which worked on the deal.

Other recent Italian bond sales have also attracted strong demand, after former European Central Bank president Mario Draghi became prime minister last month.

Demand for the debt highlights the popularity of green bonds, which provide funding for environmental projects and require borrowers to report to investors on how the funds are used. 

Tanguy Claquin, head of sustainable banking at Crédit Agricole, which was a co-manager on the transaction, said the sale was met with “very strong support” from investors, particularly those that are required to consider environmental factors in their portfolios.

The bond, which matures in 2045, was issued with a yield of 1.547 per cent. The underwriters were able to reduce the premium against a normal Italian government bond maturing in 2041 to 0.12 percentage points, a slimmer premium than the 0.15 points initially mooted.

Italy follows several European countries, including Poland, Ireland, Sweden and the Netherlands, into the green debt market. France has issued 11 green bonds since 2017, totalling $30.6bn according to Moody’s Investors Service. Germany joined the market last year with two green Bunds. In its budget on Wednesday, the UK announced plans to sell at least £15bn of green bonds in two offerings this year. 

Italy is the first riskier southern-European government to tap the green market. The spreads on Italian debt relative to the eurozone benchmark German bonds fell to a six-year low of less than 0.9 percentage points in early February in a sign of investors confidence in Draghi’s leadership of the EU’s third-largest economy. The spread widened during last week’s volatile bond market trading but remains low by recent standards.

Spain plans to follow Italy with a green bond offering in the second half of 2021. Analysts expect an initial €5-10bn sale at a 20-year maturity. Johann Plé, senior portfolio manager at AXA Investment Managers said the demand for Italy’s sale “should reinforce the willingness of Spain and others to follow suit.”

Plé said the price investors paid for the Italian green bond “remained fair” and that this “highlights that strong demand does not necessarily mean investors have to pay a larger premium”.

Green bonds often command higher prices, and therefore lower yields, than their conventional equivalents from the same issuer. The German green Bund currently trades with a “greenium” around 0.04 to 0.05 percentage points, roughly double the gap when it was initially issued, according to UniCredit analysis, while French government green debt is roughly 0.01 percentage points lower in yield than conventional bonds.

Italy’s pitch on the environmental impact and reporting of its green projects drew positive reactions from some investors. Saida Eggerstedt, head of sustainable credit at Schroders, which invested in the bond, said the details provided on projects including low-carbon transport, power generation, and biodiversity were “really impressive”.



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German regulator steps in as Greensill warns of threat to 50,000 jobs

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Germany’s financial watchdog has taken direct oversight of day-to-day operations at Greensill Bank, as the lender’s ailing parent company warned that its loss of $4.6bn of credit insurance could cause a wave of defaults and 50,000 job losses.

BaFin appointed a special representative to oversee Greensill Bank’s activities in recent weeks, according to three people familiar with the matter, as concern mounted about the state of the lender’s balance sheet.

The German-based lender is one part of a group — advised by former UK prime minister David Cameron and backed by SoftBank — that extends from Australia to the UK and is now fighting for its survival.

On Monday night Greensill was denied an injunction by an Australian court after the finance group tried to prevent its insurers pulling coverage.

Greensill’s lawyers said that if the policies covering loans to 40 companies were not renewed, Greensill Bank would be “unable to provide further funding for working capital of Greensill’s clients”, some of whom were “likely to become insolvent, defaulting on their existing facilities”.

In turn that may “trigger further adverse consequences”, putting over 50,000 jobs around the world at risk, including more than 7,000 in Australia, the company’s lawyers told the court.

A judge ruled Greensill had delayed its application “despite the fact that the underwriters’ position was made clear eight months ago” and denied the injunction.

Greensill Capital is locked in talks with Apollo about a potential rescue deal, involving the sale of certain assets and operations. It has also sought protection from Australia’s insolvency regime.

Greensill was dealt a severe blow on Monday when Credit Suisse suspended $10bn of funds linked to the supply-chain finance firm, citing “considerable uncertainties” about the valuation of the funds’ assets. A second Swiss fund manager, GAM, also severed ties on Tuesday. Credit Suisse’s decision came after credit insurance expired, according to people familiar with the matter.

While the bulk of Greensill’s business is based in London, its parent company is registered in the Australian city of Bundaberg, the hometown of its founder Lex Greensill.

In Germany, where Greensill has owned a bank since 2014, BaFin, the financial watchdog, is drawing on a section of the German banking act that entitles the regulator to parachute in a special representative entrusted “with the performance of activities at an institution and assign [them] the requisite powers”.

The regulator has been conducting a special audit of Greensill Bank for the past six months and may soon impose a moratorium on the lender’s operations, these people said.

Concern is growing among regulators about the quality of some of the receivables that Greensill Bank is holding on its balance sheet, two people said. Regulators are also scrutinising the insurance that the lender has said is in place for its receivables.

Greensill Bank has provided much of the funding to GFG Alliance, a sprawling empire controlled by industrialist Sanjeev Gupta.

“There has been an ongoing regulatory audit of the bank since autumn,” said a spokesman for Greensill. “This regulatory audit report has specifically not revealed any malfeasance at the bank. We have constructive ongoing dialogue with all regulators in all jurisdictions where we operate.”

The spokesman added that all of the banks assets are “unequivocally” covered by insurance.

Greensill, a 44-year-old former investment banker, has said that the idea for his company was shaped by his experiences growing up on a watermelon farm in Bundaberg, where his family endured financial hardships when large corporations delayed payments.

Greensill Capital’s main financial product — supply-chain finance — is controversial, however, as critics have said it can be used to disguise mounting corporate borrowings.

Even if an agreement is struck with Apollo, it could still effectively wipe out shareholders such as SoftBank’s Vision Fund, which poured $1.5bn into the firm in 2019. SoftBank’s $100bn technology fund has already substantially written down the value of its stake.

Gupta, a British industrialist who is one of Greensill’s main clients, separately saw an attempt to borrow hundreds of millions of dollars from Canadian asset manager Brookfield collapse.

Executives at Credit Suisse are particularly nervous about the supply-chain finance funds’ exposure to Gupta’s opaque web of ageing industrial assets, said people familiar with the matter.

The FT reported earlier on Tuesday that Credit Suisse has larger and broader exposure to Greensill Capital than previously known, with a $160m loan, according to two people familiar with the matter.

Additional reporting by Laurence Fletcher and Kaye Wiggins in London



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The latest annual ranking of businesses by revenue growth. Explore the 2021 list here — the full report including in-depth analysis and case studies will be published on March 22



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