£107m Midland Met Hospital funding pulled by banks

The European Investment Bank (EIB) was part of a consortium of five banks that loaned £107m to pay for the construction work. But, with work at a standstill and little progress on restarting the project, the EIB has terminated the deal.

But, because Carillion has already had the money, it means the banks "are expected to incur a significant loss", said the EIB.

It means that if and when the Sandwell and West Birmingham Hospital Trust can find a new building contractor, it will have to start virtually from scratch putting together a deal to pay for it. The EIB says it would be prepared to consider a new proposal from the trust.

Part of the reason for the move is that the EIB and its partner banks – Credit Agricole, KfW IPEX, DZ Bank and Sumitomo Mitsubishi Banking Corporation – have continued to pay project costs since Carillion collapsed in January. These have so far amounted to around £5 million.

In a statement, the bank said: "Since the collapse of Carillion in January 2018 the EIB has been working closely with the hospital trust, UK government, the directors of the project company and other lenders to seek a financing solution for a new contractor."

Jonathan Taylor, vice president of the EIB, added: “The European Investment Bank 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.”

Toby Lewis, chief executive of Sandwell & West Birmingham Hospitals NHS Trust, said: “The statement from our private finance partner’s funders is not wholly unexpected.

"It reflects a recent governmental decision that the extant PFI contract will not provide the vehicle to complete the hospital.

"We are working with partners locally and nationally to hand the site and the project back to the Trust in coming weeks. 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 and as such interim changes to acute care will be needed locally next year.”