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Britain’s biggest banks are in talks to set up a new vehicle that would take charge of recovering tens of billions of pounds of COVID-19 debts as lenders seek to avoid a public relations crisis when the emergency loans fall due next year.
Sky News has learnt that the main banking lobby group, UK Finance, has commissioned a feasibility study for a “shared recoveries utility” that would seek to create distance between individual banks and the pursuit of repayments under the Bounce Back Loan Scheme (BBLS).

The talks are at an early stage, but underline the alarm within the major UK high street banks about the reputational risks associated with chasing money from well over one million embattled small businesses.
Under the BBLS, which has become the largest of Chancellor Rishi Sunak’s coronavirus lending schemes, companies can borrow up to £50,000 on an interest-free basis.
The loans are fully guaranteed by the government, but sit on individual banks’ balance sheets, meaning that they are responsible for collecting the money when it becomes repayable.

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In July, the Treasury trumpeted the fact that more than 1 million Bounce Back Loans had been approved under the programme, and the most recent public figures showed that 1.17 million facilities had been approved with a total value of £35.47bn.

The latest figures, which are now being issued on a monthly basis, are to be published next Tuesday.

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Where jobs have been lost across the UK

Even a stronger-than-anticipated recovery in the UK economy is likely to leave the banks sitting on billions of pounds of loan defaults under the BBLS.
The discussions about a shared recoveries utility have got underway in recent weeks, with EY, the accountancy firm, being asked to prepare a feasibility assessment for such a vehicle.
They have acquired greater urgency since the publication in July by TheCityUK’s Recapitalisation Group of a report suggesting that British businesses would have accumulated £100bn of unsustainable debt by the end of March 2021, of which £35bn would stem from government loan schemes.
Earlier this week, those figures were reduced to approximately £70bn and up to £23bn respectively – substantially lower but, nevertheless, still vast sums for banks to be tasked with collecting.
Banking industry sources said that any new vehicle would almost certainly be restricted to focusing on the BBLS, with larger loans offered under the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme remaining the responsibility of individual lenders to recover.
Loans made under the other two initiatives have an 80%, rather than 100%, state guarantee.
The new mechanism would require the endorsement of the City regulator, the Treasury and the British Business Bank, the government-owned lender which has been given responsibility for administering Mr Sunak’s emergency schemes.
Although it appears attractive to bank executives anxious not to be cast as the villains of the coronavirus pandemic – which would reprise their role during the 2008 financial crisis – establishing such a vehicle is likely to be fiendishly complicated.

April: Is the government’s loan scheme working?

The new utility would need to be given powers to pursue loan recoveries, while providing the manpower required to collect well over 1 million individual loans could also prove too complex to organise.
A source at one lender said the advantage of a shared utility would be to guarantee that all participating lenders under the BBLS were employing the same guidelines, providing a consistency of experience for exposed SME customers.
“There would be the benefit of acting with one, agreed industry-wide recovery protocol and the new utility would act semi-autonomously,” the source said.
“That would give the British Business Bank confidence that the banks were not just going through the motions and then cashing in the government guarantee.”
The discussions about a new vehicle go well beyond previously reported talks about a code of conduct that the major lenders and Treasury had been discussing.
UK Finance and EY declined to comment.

The Crown Estate has said it expects the value of its profits and property to be badly affected by the COVID-19 pandemic.
The news comes as the estate, which includes London’s Regent Street, the Windsor Estate, retail parks and rights to various seabeds, reported a profit of £345m during the 12 months ending 31 March.

But the value of the Queen’s land and property decreased by 1.2% to £13.4bn, mostly as a result of a £552.5m (17%) write down of its regional portfolio due to the challenging retail market, including falling rental values.
Dan Labbad, chief executive of The Crown Estate, said many of the organisation’s real estate markets were already “facing long term structural challenges which have now been accelerated as a result of COVID-19”.
Mr Labbard said the estate was “under no illusions about the challenges we face”.

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“Whilst it is too early to accurately forecast our performance for next year, we do expect our net revenue profit and property valuations to be significantly down.

“However, our resilient structure, established to operate in perpetuity and with no debt, coupled with our diverse portfolio, provides us with the means to navigate this current crisis, while continuing to invest for the long term.”

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The Crown Estate said it had focused on supporting businesses where it can make the greatest difference, for example smaller, independent businesses who are facing particular challenges.

Where jobs have been lost across the UK

It added: “The current economic and market disruption has led The Crown Estate to take the precaution, with the agreement of the Treasury, of implementing a staged process for the payment of the whole of its net revenue profit for the year 2019/20.”
The Crown Estate would usually pass all its profits to the Treasury, which passes 25% to the Queen through the sovereign grant.
“As it cannot draw on its capital account to cover operating expenses, this step has been taken to ensure that it has sufficient revenue reserves given the current reduction in rental receipts,” the estate added.
“Of the £345m net revenue profit, a first payment of £87m was made to the Treasury on 21 July 2020, with further payments to follow as trading conditions develop.”

Ryanair has blamed European governments for “continuous changes” in travel restrictions, as it announces a 20% cut in October capacity.
It follows a another 20% cut announced last month, meaning the airline expects October capacity to fall from 50% to 40% of the levels seen at the same time last year, before the effects of the coronavirus pandemic.

But it also said it expected flights to be more than 70% full under the reduced schedule.

O’Leary slams ‘bizarre’ travel quarantines

Ryanair blamed “damage caused to forward bookings by continuous changes in EU government travel restrictions and policies, many of which are introduced at short notice, which undermine consumers’ willingness to make forward bookings”.
The Irish airline, which resumed flights in July after the lockdown, singled out Ireland, blaming the government for maintaining “excessive and defective travel restrictions”.

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But many countries in the EU, along with the UK, have brought in 14-day quarantine requirements for travellers returning from certain places, a move that has attracted criticism from Ryanair boss Michael O’Leary among others.

The UK government has been criticised for bringing in travel restrictions with little notice, leaving many travellers reluctant to book due to the uncertainty.

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Speaking about October’s capacity cut, a Ryanair spokesperson said the airline was “disappointed” but “as customer confidence is damaged by government mismanagement of COVID travel policies, many Ryanair customers are unable to travel for business or urgent family reasons without being subjected to defective 14-day quarantines”.
“While it is too early yet to make final decisions on our winter schedule (from November to March), if current trends and EU governments’ mismanagement of the return of air travel and normal economic activity continue, then similar capacity cuts may be required across the winter period.”

Where jobs have been lost across the UK

Turning again to Ireland, the spokesperson called on the country’s transport minister Eamon Ryan to “explain why NPHET (Ireland’s National Public Health Emergency Team) has kept Ireland locked up like North Korea since 1 July, while at the same time Italy and Germany removed all intra-EU travel restrictions and have delivered COVID case rates which are less than half the rate which NPHET has presided over in Ireland”.
“Intra-EU air travel is not the problem and these defective travel bans are not a solution,” they added.
Ryanair is among many airlines struggling to recover from the worst of the pandemic and in June it announced plans to close bases at London Stansted, Southend and Newcastle airports, resulting in 670 job losses.

Retailers continued their slow recovery during August, as sales volumes increased by 0.8% compared with July, according to the Office for National Statistics (ONS).
The figures show August was the fourth consecutive month of growth, also showing a 4% increase compared with February, before the country faced the full impact of the coronavirus pandemic.

The ONS’ deputy national statistician for economic statistics, Jonathan Athow, said: “Sales of household goods thrived as the demand for home improvement continued and, despite a dip this month, online sales remained high.
“However, clothing stores continued to struggle with sales still well below their February level. Overall, the switch to greater online sales means the high street remains under pressure.”

Where jobs have been lost across the UK

The figures for August also show:

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Retail sales values increased 0.7% compared with July and 2.5% compared with February
Non-store retailing volumes were 38.9% above February and clothing stores were still 15.9% below February’s pre-pandemic levels
Spending for home improvements increased, with sales volumes in household goods stores up by 9.9% compared with February
Online retail sales fell by 2.5% compared with July, but strong growth seen during the pandemic means sales were still 46.8% higher than in February
Lynda Petherick, head of retail for professional services company Accenture UK and Ireland, said consumers were “getting back to normal”.

But she warned: “A dark cloud still hangs over the sector which means the apparent rebound could prove to be a false dawn.

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“The recent tightening of lockdown measures, both locally and nationally, will be a bitter pill to swallow for retailers, and could lead to a steep drop in consumer confidence in September.”
Emma-Lou Montgomery, associate director for Personal Investing at Fidelity International, also had a warning: “It’s not all as rosy as it seems and beneath the headline figure is a very mixed bag.
“There are some tough decisions in store for retailers. More shop closures and redundancies are inevitable as local lockdowns rise and the end of the furlough scheme draws ever nearer.”
She cited the decision of department store John Lewis to suspend bonuses for the first time in 67 years as evidence of the “heavy impact of the pandemic even on the largest of retailers”.
“While the next few months are shrouded in nervous uncertainty, one thing for sure is that the Christmas retail period will be more important than ever for retailers this year.”

Could Christmas be cancelled?

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Lisa Hooker, consumer markets leader at PwC, added that, despite the “stellar recovery”, not every category of retailing had shared in the profits.
“As we approach the run up to Christmas – during which the lion’s share of profits are normally made – retailers will be hoping that the fragile recovery is not derailed by more widespread lockdowns, rising unemployment or dented consumer confidence.”
Helen Dickinson, chief executive of the British Retail Consortium, described the recovery as “fragile”, adding that city centre shops still suffer from low footfall.
She added: “With further lockdowns looming, the government must provide clarity on the impact it will have for shops.
“Retailers have invested hundreds of millions making stores safe and secure for customers during the pandemic; this includes perspex screens, social distancing measures and additional hygiene measures. As such, retail remains a safe space for consumers, even under local lockdowns.”

Caixabank has announced the terms of the acquisition of state-owned lender Bankia in a deal that will create Spain’s biggest domestic bank.
Caixabank said on Friday that its board had agreed the previous day to approve and sign the joint merger plan, creating a bank with around €600bn (£548bn) in assets.

The combination of Caixabank and Bankia, respectively Spain’s third and fourth largest lenders, will still be smaller, overall, than local rivals Santander and BBVA – both of which have significant operations outside Spain.

Why the merger of two Spanish banks could trigger similar tie-ups across Europe

The banks said the merger should be completed during the first quarter of next year.
Earlier this month, Sky’s business presenter Ian King wrote of the then-prospective merger: “The cost savings could be significant, with analysts suggesting that as many as half of the pair’s combined total of 6,000 branches could close.

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“Secondly, the combined business would overtake Santander to become Spain’s biggest domestic lender, with approximately 30% of the market. That scale could give the combined entity a big competitive advantage.

“Thirdly, the institution would be less subject to state interference.”

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Regarding the prospect of closures, Caixabank said on Friday that no decisions had been made but its combined entity would analyse workforce overlaps, duplications and economies of scale.
The new bank, with 51,500 employees in Spain, will be called Caixabank and the name Bankia will be gradually dropped.
It will have more than 20 million customers and a 24% market share in deposits; 25% in loans and 29% in long-termsavings products.
Bankia’s chairman José Ignacio Goirigolzarri Tellaeche said on Friday that he was “reasonably comfortable” that the merger would get antitrust approval.

Image: Caixabank’s Gonzalo Gortazar will be chief executive of the new group
Bankia’s Jose Ignacio Goirigolzarri will serve as executive chairman with limited powers and Gonzalo Gortazar, currently Caixabank’s chief, will be chief executive.
Bankia was created from the merger of seven local savings banks in 2010 but, less than two years later, the whole entity had to be part-nationalised after it came close to collapsing under the weight of doubtful property loans.
Madrid emerged with a 62% stake in Bankia but, after a merger with Caixabank, would have just 14% of the combined entity.
King added: “What has really excited investors about this potential merger, though, is the signal it sends to the wider banking sector.
“Europe’s banking sector is far more fragmented than in other parts of the world and, accordingly, its banks are much smaller than their counterparts in the United States and China.
“This has long been a cause of irritation to banking executives in Europe and there have been periodic calls for cross-border consolidation.”

Caixabank has announced the terms of the acquisition of state-owned lender Bankia in a deal that will create Spain’s biggest domestic bank.
Caixabank said on Friday that its board had agreed the previous day to approve and sign the joint merger plan, creating a bank with around €600bn (£548bn) in assets.

The combination of Caixabank and Bankia, respectively Spain’s third and fourth largest lenders, will still be smaller, overall, than local rivals Santander and BBVA – both of which have significant operations outside Spain.

Why the merger of two Spanish banks could trigger similar tie-ups across Europe

The banks said the merger should be completed during the first quarter of next year.
Earlier this month, Sky’s business presenter Ian King wrote of the then-prospective merger: “The cost savings could be significant, with analysts suggesting that as many as half of the pair’s combined total of 6,000 branches could close.

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“Secondly, the combined business would overtake Santander to become Spain’s biggest domestic lender, with approximately 30% of the market. That scale could give the combined entity a big competitive advantage.

“Thirdly, the institution would be less subject to state interference.”

More from Spain

Regarding the prospect of closures, Caixabank said on Friday that no decisions had been made but its combined entity would analyse workforce overlaps, duplications and economies of scale.
The new bank, with 51,500 employees in Spain, will be called Caixabank and the name Bankia will be dropped gradually.
It will have more than 20 million customers and a 24% market share in deposits; 25% in loans and 29% in long-termsavings products.
Bankia’s Jose Ignacio Goirigolzarri will serve as executive chairman with limited powers and Gonzalo Gortazar, currently Caixabank’s chief, will be chief executive.
Bankia was created from the merger of seven local savings banks in 2010 but, less than two years later, the whole entity had to be part-nationalised after it came close to collapsing under the weight of doubtful property loans.
Madrid emerged with a 62% stake in Bankia but, after a merger with Caixabank, would have just 14% of the combined entity.
King added: “What has really excited investors about this potential merger, though, is the signal it sends to the wider banking sector.
“Europe’s banking sector is far more fragmented than in other parts of the world and, accordingly, its banks are much smaller than their counterparts in the United States and China.
“This has long been a cause of irritation to banking executives in Europe and there have been periodic calls for cross-border consolidation.”

Sadiq Khan is calling for the government to extend the business rates holiday for another year as companies say reintroducing the rates would be the “final blow” for those already struggling during the pandemic. 
Business rates for the retail, hospitality and leisure sectors have been halted in England until the new financial year starts next April.

The mayor of London, along with councils in the capital, have urged the rate holiday to be extended to 2021/22 over fears tens of thousands of jobs could be lost in the city.

Where jobs have been lost across the UK

“Businesses across London continue to struggle from the impact of COVID-19,” Mr Khan said.
“If the business rates holiday comes to an end, I worry any employers will have no choice but to make more people unemployed.

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“Many large retail, leisure and hospitality businesses – accounting for thousands of Londoners’ jobs – are taking important decisions for the next financial year right now, so certainty over the business rates holiday is needed urgently.”

The London mayor also called for an extension to the business rates holiday for childcare providers, which he said were “crucial” in allowing Londoners to return to work.

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The New West End Company, representing 600 businesses in the capital’s shopping district, said reintroducing business rates next April would be the “final blow”.
“The result will be more business closures and potentially 50,000 job losses, severely diminishing London’s appeal to visitors, investors and global talent,” said chief executive Jace Tyrrell.

UK unemployment rises to 4.1%

“We appreciate the support that the government has given to businesses so far but it is clear that the impact of COVID-19 is going to last much longer than originally anticipated.”
Mr Khan and London Councils, which represents the capital’s 32 borough councils and the City of London, also want to see reforms to the system as a whole – including devolving the power to set business rates and making the system easier to understand.

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Councillor Clare Coghill, London Councils’ executive member for Business, Europe and Good Growth, said many businesses are “still reeling from the long-term impacts of COVID-19”.
“Ending the business rates holiday too soon will destabilise too many companies, leading to closures, job losses and a shrinking economy both in London and across the rest of the country,” she said.

Footballer Lionel Messi has won a legal battle over trademark rights related to his own logo.
The European Court of Justice dismissed an appeal made by the EU’s intellectual property office, EUIPO, and a Spanish cycling clothing brand called Massi on Thursday.

Messi first applied to trademark his surname as a sportswear, footwear and equipment brand in 2011.
The owners of Massi disputed this, arguing that the footballer’s brand would lead to confusion among customers.
The EU high court have said that Messi’s reputation is a relevant factor in distinguishing between the footballer’s brand and the cycling company.

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The cycling company was successful in challenging the application after a complaint was upheld in 2013, but it lost in a ruling at the EU’s General Court in 2018.

At the time, the court said “Mr Messi is, in fact, a well-known public figure who can be seen on television and who is regularly discussed on television or on the radio” – meaning confusion between the two was unlikely.

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The 33-year-old has been named world football player of the year a record six times and is an all-time top scorer for Barcelona, Argentina and in Spanish football.
He is also the highest-paid player in the world, according to Forbes.
The footballer recently made a decision to stay with Barcelona, the club he has spent his entire career, to avoid entering a legal battle.

A taskforce aimed at accelerating sports fans’ mass return to stadia even as more locations across the UK face tighter coronavirus restrictions is to be spearheaded by David Ross, the Carphone Warehouse co-founder.
Sky News has learnt that the Sports Technology Innovation Group (STIG) has picked a panel of business and technology experts to work on technology-based solutions that could include a digital self-certification regime that would enable supporters to resume watching their favourite teams and sports.

Insiders said on Thursday that the group’s members would include Gary Hoffman, the former banker who now chairs the Premier League; and Natalie Ceeney, who chairs the tech-focused lobbying group Innovate Finance and is vice chair of Sport England.

Image: David Ross (r) was a co-founder of Carphone Warehouse
Edward Wray, a co-founder of Betfair, is also understood to have been invited to join, while Jonathan Van-Tam, the deputy chief medical officer for England, will also be a member, the sources added.
Mr Ross is a well-known figure in the arts and sporting worlds, having just been named as chairman of the Royal Opera House’s board of trustees.

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He also chairs the British Olympic Association, which is awaiting a decision about whether this year’s Tokyo Olympics will take place in 2021.

The Football Association and the England and Wales Cricket Board are understood to have been pushing for the creation of a new technology-focused panel as evidence grows of the devastating impact that the absence of spectators is having on the finances of professional sports clubs and leagues.

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This weekend, eight English Football League matches – spread across the Championship and Leagues One and Two – will admit 1,000 fans each as the preparations for a more widespread return continue.

Image: Socially distanced football fans
Rick Parry, the EFL chair, said of the pilot: “It’s encouraging that we are in a position to move forward with the next phase of the pilot programme and give a small number of our clubs the opportunity to welcome back up to 1,000 fans this week.
“The requirement to welcome spectators back through turnstiles has not diminished in any way, the financial challenges facing EFL clubs have been explained on numerous occasions, they are substantial and a problem that requires immediate solutions.”
The STIG will report its recommendations to Oliver Dowden, the culture secretary, in the coming months.
One person briefed on the group’s remit said it would be advisory in nature, and focused on “the whole customer journey (from home to stadium) in returning crowds to major sporting events and providing ideas and evaluation of those ideas to government”.
In an article for The Sun newspaper earlier this month, Mr Dowden said he was “doing everything I can to get fans back in the stands, following the teams and enjoying the sports they love”.

Where jobs have been lost in the UK economy
Where jobs have been lost in the UK economy

“Sport’s economic health depends on their return to stadiums too. But this pandemic isn’t over, and we still face a number of challenges.
“We need to look carefully at the practicalities of opening things up – like how fans can travel safely to and from stadiums, as well as being safe in those venues – which is why these pilots are so important.”
Details of the STIG members’ prospective recommendations remain unclear at this stage, although one insider said some form of self-certification app was likely.
Mr Dowden wrote in his newspaper article that other ideas, including “tracking devices to measure social distancing between fans, and fluorescent disinfectants to reveal how often surfaces are touched” were expected to be considered.
Sports industry figures say the new group’s work will be undertaken in parallel with Operation Moonshot – the prime minister’s widely debated ambition of introducing rapid mass testing across the UK, which emerged earlier this month.
The Premier League said: “The Premier League and its clubs met today to discuss the return of supporters to stadiums.
“Safety remains the number one priority and clubs reiterated their commitment to ensuring Premier League stadiums will be among the safest public places, through the effective use of a wide range of mitigation measures.
“Clubs will adopt a range of common standards, which will help deliver bio-secure, safe environments for fans across the League.
“Clubs reaffirmed that the continued loss of matchday revenues is having a significant impact across the League as well as on the football pyramid and local and national economies.
“Taking into account the high safety standards which will be set by the Premier League in conjunction with the relevant public authorities, the league and clubs urge government to remain committed to the 1 October date for the controlled return of fans to sporting venues.”
A spokesman for the Department for Digital, Culture, Media and Sport declined to comment.
The STIG members are expected to be disclosed publicly later this month.

It is one of the world’s most famous luxury brands and maker of the world’s fastest production car – and it could soon have a new owner.
Bugatti is set to be sold by its current parent, Volkswagen, to the Croatian entrepreneur Mate Rimac, according to the German magazine Manager.

A sale would mark the end of an inspiring story and mark a partial unravelling of the empire built by Ferdinand Piech, the engineering genius who rescued VW from bankruptcy and, over several decades, made it one of the world’s biggest and most profitable carmakers.

Image: Ferdinand Piech, former Volkswagen Group chairman, died on August 25th 2019, aged 82 years
Dr Piech, who died last year, did more than anyone to make Bugatti a success.
It is perhaps no surprise that, barely a year on from Dr Piech’s death, VW is looking to sell the brand he revived and which he described as his “favourite toy”.

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The COVID-19 pandemic has dealt VW an immense blow.

Following a 23% drop in sales, the company reported a pre-tax loss of €1.4bn (£1.3bn) for the first six months of this year, compared with a profit of €9.6bn (£8.8bn) in the same period last year.

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With net debt of around €162bn (£148bn), it is the world’s most indebted company, at a time when it is needing to invest billions of euros in developing electric and driverless vehicles.
Research and developments costs during the first half of 2020 alone came to €6.7bn (£6.1bn). It needs to spend every penny carefully and a “hobby brand”, as Bugatti has been seen in some parts of VW, is no longer a priority.

Image: VW is focusing its investment on all-electric cars such as the ID Buggy concept as seen at the Geneva car show
Nor is this the first time that a sale of Bugatti has been mooted. There was speculation five years ago, following the “dieselgate” emissions scandal, that VW could dispose of the brand to raise money.
Mr Rimac, who has been nicknamed “the Elon Musk of Croatia”, also knows VW well.
Porsche, which owns 53.3% of VW, took a 10% stake in his electric supercar company, Rimac Automobili, which it has since raised to 15.5%.
At the time of its original investment, in June 2018, Porsche talked openly of transferring Mr Rimac’s technology to both Bentley and Bugatti. Since then, Peter Tutzer – a key player in the development of the Veyron – has joined Mr Rimac as its senior technical adviser.
And Mr Rimac has famously compared his flagship vehicle – in which another former Top Gear presenter, Richard Hammond, was almost killed in 2017 – to the Bugatti.

Image: The Veyron, while widely praised by enthusiasts, was hugely loss-making
The emotional wrench to the Piech and Porsche families of offloading Bugatti could be tempered, according to the magazine, by putting Porsche at the heart of any sale. It is being suggested that any sale of Bugatti would not see any cash change hands but see Porsche raise its stake in Mr Rimac.
The magazine’s Europe editor, George Kacher, wrote: “If the future of motoring is electric, not 1500 horsepower petrol-powered hypercars that sell in the hundreds, then getting their hooks further into Rimac, a company with a reputation for stellar electric vehicle technology, sounds very beneficial indeed.”
Bugatti was founded in 1909 by the Italian-born entrepreneur Ettore Bugatti in Molsheim, now part of France but then, part of Germany. The company was a pioneer in grand prix racing – a Bugatti won the first ever Monaco Grand Prix in 1929 – and the marque also won accolades after triumphing at Le Mans. Its cars were driven by monarchs and heads of state and the brand was lauded for turning fast cars into art.

Image: The 1912 Bugatti Type 15
But a series of disasters conspired against the business.
Mr Bugatti’s eldest son, Jean, was killed in 1939 test-driving a racing car while Bugatti’s factory was left in ruins during the Second World War. Mr Bugatti subsequently sought to revive the business but died in 1947. And so, it seemed, did this most romantic of marques. Production ended in the 1950s and the business ended up merging with its rival Hispano-Suiza. The combined business, in turn, was bought in 1968 by Snecma, the French aircraft engineering group famous for its work developing Concorde.
The brand was picked up in 1987 by the Italian businessman Romano Artioli who, in partnership with Mr Bugatti’s youngest son, Michel, opened a new factory at Modena in Italy in 1990 to make a new model, the EB 110, capable to speeds of up to 325km per hour.
The company subsequently acquired Lotus, the famous British sports car marque, but a planned stock market flotation in 1994 floundered. In September 1995, having built just 139 cars over four years, the business went bankrupt. Mr Artioli retained ownership of the Bugatti brand.

Image: The Bugatti Type 57C Gangloff Roadster
Enter Dr Piech, fresh from losing a drawn-out battle with rival BMW for ownership of Rolls-Royce Motors, the most famous luxury car brand of them all. Having already bought Lamborghini, he was keen to own more luxury and supercar brands to take VW upmarket, enabling it to compete more effectively with both BMW and Daimler-Benz.
Mr Artioli was persuaded to sell VW the Bugatti brand in June 1998 and, just a few months later, unveiled a Bugatti concept car at the Paris Motor Show. The EB 118 was greeted with disbelief. Designed by Dr Piech himself, it was the first passenger car to have an 18-cylinder engine. Other versions followed and the fourth concept car became the Bugatti Veyron, launched in 2005, boasting a top speed of 407km per hour (253mph) – faster than a Formula One car.
It won vast accolades including, from among others, the BBC’s Top Gear programme which, in 2009, named it best car of the decade after racing it against an aircraft.
In 2008, presenter James May drove the car at its top speed, stating at the time: “I’m pretty confident that’s as far as I’m ever going to go in a car. Incredible. It’s made my eyes water. It’s a bit disorientating.”
Three years later, he drove it at a new top speed of 417km per hour. Colleague Jeremy Clarkson described it as “cartoonishly fast”.
By then, the Veyron had been officially named the world’s fastest car in the Guinness Book of Records, but while it was an engineering triumph, in financial terms, it was anything but. VW is estimated to have lost $5m (£3.9m) for each Veyron built.
For Dr Piech, that was never the point. His aim was to show that a supercar could be designed and built from scratch. Throughout, he insisted that a Bugatti had to be distinctive but immediately recognisable, frequently reminding people of Mr Bugatti’s original mantra: “If it’s comparable, it’s not a Bugatti.”
The Bugatti Chiron followed. Named in honour of Louis Chiron, the famous French motor racing driver who had worked at the Molsheim site, it was launched in 2017 with a UK price tag of £2.5m.
Despite its past losses, more recently, VW has insisted that Bugatti has made a “positive contribution” to its financial performance.
Such a sale is unlikely to be the end of VW’s pruning of its portfolio. The speculation is that, if it offloads Bugatti, disposals of Bentley and Lamborghini could follow.