Nationwide and Lloyds announce Carillion support measures

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Interserve, a rival of Carillion until its financial collapse this week, has seen its share price fall sharply on a report the Government is closely monitoring the company.

Shares of Interserve Plc seesawed Wednesday on a report that the United Kingdom contractor is under government scrutiny after the collapse of rival Carillion Plc.

A spokesperson for the government said: "We have created a task force to continue to support and monitor the impact on small businesses and employees who have been affected by Carillion's insolvency".

"Why was it apparent to everone except the government that Carillion was in trouble?" Interserve shares fell as much as 15 percent, before rebounding to trade only slightly lower following reassurances from the company and the government.

The company issued profit warnings in September and October past year, after it ran into difficulty on a number of waste-to-energy contracts that deal with generating energy in the form of electricity and/or heat from the primary treatment of waste.

It went on to issue a second warning the following month, partly as a result of a hiatus in the United Kingdom government outsourcing projects following the June 2016 referendum that saw Britain vote to leave the European Union.

Cabinet Office minister David Lidington defended the government's handling of the company.

Gareth Oakley, managing director, SME Banking at LBG, said: "We know how critical it will be for businesses within Carillion's supply chain to receive support with their cashflow, to help them through the temporary challenge to their business".

"The construction industry is the cornerstone of the United Kingdom economy so it's in all of our interests to do what we can to support these small companies and limit the domino effect that Carillion's demise could have".

A spokesman said the banks withdrew funding from Carillion because of "viability", adding: "There are reasons the Carillion situation happened".

Shadow Cabinet Office minister Jon Trickett said: "The Government awarded Interserve numerous contracts after significant profit warnings, clearly showing us that Carillion was not an isolated case".