The country’s four full-service banks have all announced relief measures for personal and business customers impacted by the Covid-19 outbreak and nationwide lockdown.
Standard Bank moved first with certain targeted relief, followed by Nedbank during last week. Absa announced a number of measures late on Sunday and FNB made public its relief on Monday morning.
FNB CEO Jacques Celliers says the industry had to first make sure it got itself “operationalised” for lockdown. He says the bank’s operating model, where it has changed customers’ behaviour and shifted them to its digital channels ahead of other banks, has helped.
He says banks then “worked hard behind the scenes with regulators and competition authorities” to ensure they would be able to respond in a meaningful way. From FNB’s perspective, Celliers says it knew “March would be tough but ‘okayish’ and that April, May and June would be really tough”.
The South African Reserve Bank Prudential Authority acted this weekend, publishing three proposed directives for comment. These relate to banks’ liquidity coverage ratios, temporary capital relief and the treatment of restructured credit exposures (under International Financial Reporting Standards). While these are open for comment until Friday, they will likely be finalised this weekend for implementation.
The banks have started acting on these proposals, and Celliers says they are grateful for the swift action by regulators: “This allows us to start with our first set of assistance, with meaningful interventions.”
On Sunday evening, Absa announced a “comprehensive customer, business and corporate relief programme”, effective Monday. Absa says “customers in good standing (with up to date accounts), and who have been financially impacted by the pandemic, will have the opportunity to opt-in for payment relief”.
Customers will be able to defer payments for a period of three months, or to “pay reduced instalments by agreement with the bank”. If customers are in a position to, they will continue to pay instalments as normal. “Relevant agreements will be adjusted, by revising the loan period and capitalising interest during the relief period.”
There is no restriction on monthly earnings or segment – this is across its entire base.
Arrie Rautenbach, CEO of Absa Retail and Business Banking SA, says this “programme is testament to our commitment to finding real, customer-focused solutions, in a time of great uncertainty for everyone”.
FNB has opted for what Celliers argues is the most powerful way to help its customers, instead of offering relief “product by product”. Qualifying customers (who are in good standing) will be able to request help via the FNB app. This relief will be across all loans a customer or business holds with the bank and its insurance arm.
“We wanted our interventions to be meaningful,” says Celliers. Nearly half its customer base has a credit relationship with the bank, across secured and unsecured products, and he says FNB wanted a solution that could work for 70% to 80% of those (those in good standing). “Their great banking profiles should remain intact as far as possible through the cycle.”
He says that while many of the specifics will be made available over the coming days, customers can already apply for assistance in the app.
Media releases about measures announced by FNB thus far are available here. It does not have a Covid-19 help site, as this assistance is provided via the FNB app.
Nedbank has not yet announced blanket relief, although it says it will “continue to be guided by our existing lending policies which includes a number of solutions designed to assist clients experiencing payment difficulties”. These include “bespoke payment arrangements” and the “restructuring of debts, where the latter includes possible term extensions and reduced instalments”.
On credit card products, it has halved the minimum repayment amount to 2.5% from April (for three months).
Nedbank has also said it will waive the penalty fee (“for up to the value of R200 000 at an overall portfolio level”) on early withdrawals of investment funds to “supplement any cash flow challenges experienced [by clients] during this period”.
Standard Bank’s first wave of relief was targeted at small and medium-sized enterprises (SMEs) and students.
For affected businesses and business owners, it is offering:
“A Coronavirus Payment Interruption Scheme on business loans for small businesses with a turnover of less than R20 million per year; and
“A three-month instalment relief for all personal loans for small business owners of businesses with a turnover of less than R20 million per year.”
Automatic instalment relief has also been offered to qualifying customers in two segments: full-time students and those “more vulnerable” customers who earn less than R7 500 a month.
Capitec Bank and Investec have not yet announced any specific measures to provide relief to impacted customers.
There will likely be a raft of announcements from all banks over the coming weeks.