FNB may provide even more relief
FNB expects to provide even more payment relief to distressed customers as it prepares to implement the new-loan guarantee scheme. FNB and WesBank, two businesses in the FirstRand portfolio, announced on Tuesday that they had jointly approved payment breaks on more than 500,000 credit agreements for 150,000 individuals and small businesses affected by Covid-19.
FNB says it expects to provide even more payment relief to distressed customers as it prepares to implement the new loan guarantee scheme.
FNB and WesBank, two businesses in the FirstRand portfolio, announced on Tuesday that they had jointly approved payment breaks on more than 500,000 credit agreements for 150,000 individuals and small businesses affected by Covid-19.
This comes after Absa’s announcement on Monday that it had rolled out its debt relief programme to nearly 400,000 struggling consumers and small businesses.
The banks move is a sign of a wave of financial distress gripping consumers during the lockdown that has resulted in businesses shutting down.
“We expect elevated applications for some time still given expected slower ‘opening up’ realities. Many customers took their time to explore options,” said FNB CEO Jacques Celliers.
The payment relief, together with credit insurance assistance, amounts to more than R4.3bn so far. Absa said on Monday that 376,000 account holders had taken advantage of payment relief the bank offered, amounting to R5.8bn in cash flow over three months for customers who have been hit by Covid-19.
Absa’s approach differed from FNB’s in that it allowed customers to “opt in” with most not having to undergo a vetting process.
Celliers said the bank continued to scale up its support for businesses to help them manage the immediate effect of the lockdown and was offering qualifying customers a payment break by paying installments on their behalf for three months.
“As a result, we have structured our assistance at prime interest rates to alleviate the financial burden and give customers the flexibility to repay the facility over flexible terms,” Celliers said.
FNB’s payment breaks were provided to individual customers across the bank’s full, credit-product range, the group said.
More relief would be available when the Treasury, the Prudential Authority, and the banks completed putting the finishing touches to the new loan guarantee scheme.
“The government guarantee is expected to go live in the next few days once all legal arrangements have been put in place. Operationally, [our] teams are ready to start taking applications,” said Celliers.
The initial phase will see R100bn in borrowing made available to the banks to extend specially designated Covid-19 loans to distressed businesses and consumers. The loans will have standard conditions, will charge an interest equivalent to the prime lending rate, and will not initiate repayment instalments for the first six months. They will then be repaid over as long as 60 months thereafter.
The banks will be insured against losses over 6% of the value of a loan through a guarantee provided by the Treasury.
The loan guarantee scheme accounts for R200bn of the R500bn relief package announced by the president last month.
WE HAVE STRUCTURED OUR ASSISTANCE AT PRIME INTEREST RATES TO ALLEVIATE THE FINANCIAL BURDEN