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Standard Bank provides Covid-19 debt relief for SMEs, students

Nedbank to support clients with cashflow challenges as a result of Covid-19.
Image: Dean Hutton, Bloomberg

In a bold and welcome move, Standard Bank announced on Sunday (March 22) that it would introduce a three-month payment holiday for small businesses with a turnover of less than R20 million, as well as for full-time students with student loans.

There appeared to be some confusion after several private banking clients received system-generated messages from the bank, informing them that they qualified for a three-month payment holiday on their loans. However, the bank clarified that contrary to reports on social media, the three-month payment holiday only applies to qualifying small businesses as well as designated student loans.

The payment holiday will commence on April 1 and run through to June 30, 2020. Standard Bank will set up automatic new payment terms for these small business owners. “This measure will not only assist our small business clients with managing their cash flows, but also allow them to honour payments to their own employee base. The relief will come from capitalising the interest and fees typically paid to the bank each month and changing the terms of repayment to a later date,” explains Standard Bank South Africa CEO, Lungisa Fuzile.

Full-time students with a Standard Bank student loan will benefit from a payment holiday over the same period at 0% interest and with zero fees. The payment holiday will be applied automatically by the bank to qualifying customers, without them having to put in an application.

Fuzile says all other customers are requested to contact the bank to indicate their circumstances. “Assistance from Standard Bank will include options to defer payment for an agreed period and the opportunity to restructure and consolidate the overall debt.”

What are the other banks doing?

Nedbank

Nedbank released a statement late on Sunday night, stating that it would support clients with individual solutions to cashflow challenges they may experience as a result of Covid-19 and this extends to any loan agreements with Nedbank in good standing. This support could include deferring payments (or part thereof) for a suitable period, extending existing loan periods or extending additional credit to manage short-term cashflow shortfalls.

Clients are encouraged to contact Nedbank to restructure debt or change payment arrangements as a consequence of Covid-19.

Absa

An Absa spokesperson says the bank will continue to evaluate the impact of Covid-19, including its economic impact, on an ongoing basis. “While it is too soon to speculate about the impact on defaults, we are looking at various possible scenarios and related actions that may become necessary should customers find themselves in financial difficulty.

“We would like to heighten our call to our customers to approach us directly in the event of any form of uncertainty, including financial distress, during these unprecedented times,” states Absa.

First National Bank

The bank told Moneyweb it has aligned with the view of the Banking Association of South Africa (Basa) and had no further update at this stage. The Basa statement says the association is urgently consulting with banking regulators and the competition authorities to determine how best the banking industry can protect its customers, small businesses and staff from Covid-19 and the social and economic impact of the pandemic. “While we are fully cognisant that the country is facing a crisis that demands an urgent response, we need to ensure that our actions are fair, legal, effective and sustainable for the duration of the pandemic – and afterwards. Any steps taken by the association or its member banks to alleviate the effects of the crisis will be detailed as soon as possible,” says Basa Managing Director Cas Coovadia.

TymeBank

CEO Tauriq Keraan notes that the bank is not yet lending to businesses or students. “However, despite the recent interest rate cut, we are keeping our GoalSave interest rates at existing levels. This means customers can still earn up to 10% interest per year if they have the money in GoalSave for longer than 90 days and if they give only ten days’ notice,” he says.

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Well done Standard Bank … coming to the forefront … (while the other banks have been sleeping and worrying about their profits … I think you a better money manager than FNB)…

This move is most welcome, the economy will turn around, people will participate once more in the economy.

Did Standard Bank have ‘’a change of heart’’, as earlier reports categorically stated that these ‘’ debt reliefs’’ will only apply to businesses that are paid up to date and in good standing.
So, what will happen to these clients/businesses that aren’t in good standing? Do you really expect them to ‘’keep on servicing’’ their accounts? The Coronavirus does not ‘’ discriminate’’ against the weaker ones, why do you? It just doesn’t sound fair and so ‘’South African’’, in times like these!

these measures will boost bank income. Relief would be lower rates, say halfway closer to their deposit rates?

Does this mean student loan repayments start from the day they are offered?

End of comments.

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