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Banks pull funding on £350m Midland Metropolitan Hospital

The banks providing the funding for the £350m Midland Metropolitan Hospital being built by Carillion prior to its collapse have pulled out of the project.

The decision was taken by the PFI scheme’s five funders: the European Investment Bank, Credit Agricole, KfW IPEX, DZ Bank and Sumitomo Mitsui Banking Corporation, with the banks expecting a significant loss as a result of terminating the financing agreement.

Sandwell & West Birmingham Hospitals NHS Trust chief executive Toby Lewis said the decision was “not wholly unexpected” and reflected a recent government decision not to use the existing PFI contract to fund the completion of the hospital.

“We are working with partners locally and nationally to hand the site and the project back to the trust in coming weeks,” he said.

“Discussions about finishing Midland Met continue and we would very much hope that during June we see material progress. It is now most likely that the new build will open in 2022.”

One of the banks to withdraw funding was the EU’s European Investment Bank (EIB), which pledged £107m towards the development in December 2015 through its European Fund for Strategic Investments.

EIB vice-president Jonathan Taylor said: “The EIB regrets that it is unable to continue support for the Midland Metropolitan Hospital following the collapse of lead contractor Carillion.

“We will continue to work closely with the hospital trust and UK authorities, and the EIB stands ready to examine any new financing proposal.”

The EIB has also invested £90m to support the construction of Carillion’s Royal Liverpool University Hospital in 2013.

CN has contacted the Royal Liverpool and Broadgreen University NHS Trust regarding the status of its own EIB loan, and is awaiting a reply.

On Monday it was revealed Mr Lewis had told Sandwell Council that the process of installing a new contractor on the project had stalled and that remedial works could cost tens of millions of pounds.

The trust’s May board papers showed that the Treasury approval process was preventing work from restarting and that weekly meetings were taking place between the trust and the Department of Health regarding the scheme.

Skanska has long been poised to take on the contract for the £350m project after rival Kier confirmed it was out of the running in March, but a deal has not yet to be completed for work to restart.

Mr Lewis warned in May that the site was now “deteriorating” and there would be significant remedial costs as a result.

The NHS chief also said he believed a 2022 opening date was “more likely” than the 2020 date the trust had targeted.

Mr Lewis has previously been quoted as saying he anticipated additional costs of around £100m-£125m to finish the project.

In April West Midland metro mayor Andy Street called for the government to approve Skanska’s appointment to “help avoid further delays to the project”.

Credit Agricole, KfW IPEX, DZ Bank and Sumitomo Mitsubishi Banking Corporation have been contacted for comment.

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