Banks bring back loan deferrals

Sydney’s Covid outbreak has triggered the return of loan deferrals across the country, as banks seek ACCC approval.

‘We have thousands of bankers around the country ready to help our customers,” says NAB CEO Ross McEwan. Picture: Aaron Francis

The Sydney coronavirus outbreak has triggered the return of loan deferrals across the country, as the banks urgently seek reauthorisation from the competition regulator.

Proposed repayment deferrals of up to three months for business loans will be offered to small business customers with less than $3m in loans and turnover of less than $5m, but only for loans in “good standing”.

Repayments must be up to date, or the customer must be engaged in a payment program with their lender.

Home loan support will also be available for individual and business customers, including deferrals on a month-by-month basis.

The return of loan deferrals coincides with the nationwide spread of the more infectious Delta variant of Covid-19.

The development came after NSW recorded 44 new Covid-19 cases on Friday, prompting Gladys Berejiklian to impose further restrictions and say that the state was facing its biggest challenge since the pandemic started.

The Premier said she could not see how NSW “would be in a position to ease restrictions by next Friday” without a “dramatic turnaround” in the number of infections.

At the height of the pandemic last year, the banking industry deferred about $260bn in business and consumer credit.

All but a tiny proportion of those loans have returned to a repayment schedule.

The new deferral program will be offered across the country and is not confined to NSW.

Commonwealth Bank chief executive Matt Comyn said the pandemic continued to impact businesses across Australia, with small businesses in particular facing cash flow challenges as a result of the lockdowns and restrictions on travel.

“We recognise that some small businesses, like those in the tourism, hospitality and retail industries, are where the effects of lockdowns are being most acutely felt,” Mr Comyn said.

From Tuesday next week, CBA said it would proactively contact eligible businesses to offer a loan repayment deferral through a simple online process.

NAB chief executive Ross McEwan, who runs the nation’s biggest business bank, said the economy had rebounded much faster than anyone had expected, but challenges would continue.

“Small businesses, especially those in retail, travel, tourism and hospitality, have suffered considerably throughout this crisis and these measures sit on top of a range of support we have available,” Mr McEwan said.

“We have thousands of bankers around the country ready to help our customers and the business community.”

Australian Banking Association chief executive Anna Bligh said the Australian economy was in good shape but recent lockdowns had taken their toll on customers and the recovery could be slow.

“Customers can rest assured that if they need help, they will get it,” Ms Bligh said.

“Your bank will help you find a way through, don’t tough it out on your own.

“Banks also stand ready to support larger businesses and they will be assessed on a case-by-case basis.”

Industry-wide assistance, she said, would include refunds of merchant terminal fees for up to three months.

Fees and notice periods on cash deposit and farm management deposit accounts would be waived for up to three months.