Big banks to deliver lockdown loans relief

The support from major lenders comes as retailers put estimates on the cost of the lockdown at $2bn.

Sydney becomes a ghost town on the first day of a widespread two-week lockdown. Picture: NCA NewsWire/Flavio Brancaleone

The major banks have unveiled a suite of support measures for NSW customers struggling through the lockdown as business counts the cost of the strict two-week stay-at-home orders.

The support from the major lenders, which includes loan deferrals, comes as estimates put the cost of the lockdown at $2bn and as Prime Minister Scott Morrison confirmed the $500 Commonwealth disaster recovery payment would be available to Sydneysiders from July 1.

Banks have also offered to provide tailored support to customers suffering financial hardship as a result of the lockdown.

CBA chief executive Matt Comyn said the bank would extend the support measures available to customers in the affected regions.

“We want to assure any of our customers who need assistance during this difficult time that we have measures in place to support them including short-term repayment deferrals. Our teams are here to help them and can tailor solutions to suit their different circumstances,” he said.

“Our business customers have demonstrated great resilience throughout the pandemic and we’re committed to doing what we can to help them.” Among the measures available were loan deferrals, fee refunds and a waiving of fees and notice periods on certain accounts, CBA said.

The bank’s retail customers can also access loan deferrals and have the option to restructure their home loan debt, switch to a fixed rate home loan and use funds in their offset accounts.

NAB, Westpac and ANZ unveiled similar measures over the weekend as Sydney endured the tough Covid-19 restrictions.

ANZ has extended its support for retail customers with measures including payment relief, waiving fees, restructuring home loan debt and switching to a fixed-rate loan.

Its business customers can also access short-term payment relief on asset finance or business loans, receive a refund on merchant terminal fees and have some other fees waived.

“We know this lockdown will have a big impact on our customers in and around Sydney. Like the lockdowns we’ve seen in other states, we know it can be some time before the real effects are felt by families and businesses,” said Mark Hand, ANZ’s group executive Australia retail and commercial banking.

The Sydney Opera House was almost deserted on Sunday after the NSW government imposed a two-week lockdown. Picture: NCA NewsWire/Flavio Brancaleone

Eligible NAB retail customers can access a temporary reduced payment arrangement or break, while business customers will be able to restructure business facilities with reduced or waived fees and may also be eligible for loan repayment deferrals.

“Throughout the pandemic we’ve been there to support customers and our bankers are ready and willing to help any businesses and individuals who need assistance,” said Andrew Irvine, NAB group executive, business and private bank.

Westpac is offering retail customers short-term credit card repayment and interest rate reductions, as well as loan repayment deferrals or reductions, interest rate reductions and loan term extensions.

Business customers may be eligible for reduced or deferred repayments on asset and equipment finance and eligible business loans as well as fee-free business loan restructuring.

As Greater Sydney, the Central Coast, Blue Mountains and Wollongong endure the harsh restrictions, economists are gauging the likely impact on the economy, with AMP chief economist Shane Oliver putting it at around $2bn.

But much of the lost economic activity was likely to be quickly recovered upon reopening, he said.

“Providing they are short, then the economic impact is relatively minor (although still horrible for those impacted) as people and businesses delay spending and economic activity which then bounces back quickly once the lockdown ends,” he said.

“With Greater Sydney, the Blue Mountains, Wollongong and the Central Coast having around 6.6 million people and covering about 25 per cent of Australian GDP, we estimate a hit to economic activity from the lockdown of about $2bn if it’s contained to two weeks with much of that likely to be recouped upon reopening.”

The ASX said market operations would be uninterrupted by the two-week lockdown.

“We will continue to closely monitor activity from a disclosure and risk management perspective,” an ASX spokesman said.

“As has been our approach since the start of the pandemic, ASX will observe health orders and expert advice, and act in the best interests of our staff, customers and the broader community.”

The Australian Retailers Association said the stay-at-home orders were a blow for retailers, with small businesses already struggling from the ongoing Covid impacts.

ARA chief executive Paul Zahra said the restrictions would lead to at least $2bn in lost retail trade and would take business and consumer confidence backwards. Mr Zahra said that without JobKeeper, he held concerns for small businesses that were “already at breaking point before this latest outbreak”.

“(The lockdown) is a devastating blow for retailers, in particular small businesses who were already struggling due to the ongoing Covid impacts,” he said.

“The restrictions will result in around $2bn in lost retail trade. While some businesses can still open, with restrictions in place, there simply won’t be the usual number of people out shopping.”