[ad_1]
To print this article, all you need to do is register or log in to Mondaq.com.
Covid-19 pandemic brings uncertainty and financial hurdles
both for companies and consumers. In an effort to mitigate the
economic maelstrom threatened by this global pandemic, banking
The sector and financial institutions have responded quickly
Introduce a range of measures designed to help prevent spread
of the virus, provide a crutch to companies in difficulty and also to
Protect consumers. Although the measures are intended to be
temporary, this pandemic could cause long-term changes in the
How the Irish Banking Sector Operates.
Provisions for SMEs / companies affected by Covid-19
The Government has announced another 1,000 million euros in
Support to help SMEs whose companies have been affected by
COVID-19. Measures introduced by the Strategic Banking Corporation
of Ireland (SBCI) include:
- Expansion of 450 million euros in two loan plans;
- Future growth loan plan that provides another 200 million euros in
installments on long-term loans for affected companies. How
funds will be released in tranches, this may provide more time
terms of loans to companies affected by the Covid-19 pandemic;
and - 250 million euro working capital loan scheme that you can provide
Liquidity support to companies.one
The Government has also established an initiative to provide a
€ 180 million support fund through Enterprise Ireland for
Assist companies in manufacturing and international services.
sectors that are vulnerable but viable. This is expected to be
available to qualified companies with more than 10 staff members who
are impacted by Covid-19.2
Banks are also offering a number of options for those affected.
First, the option to agree to a payment interruption of up to
three months for those struggling to meet payments.
Secondly, the postponement of the judicial proceedings. Third, the provision
of working capital support for both companies and personnel
customers. 3
Online banking and consumers
Due to the Covid-19 pandemic, more people are using online
banking and online shopping. Unfortunately, one of the consequences.
of that additional use has been an increase in online fraud and
cyber security threats. It has happened that some of the new
users of such online commerce are vulnerable to fraudulent emails
of those posing as EPP retailers or officials requesting payment
details or conduct health related research.4 4
Another problem facing the banking sector is the increase
potential for bank fraud through breach of trust where you are vulnerable
the people or people who cocoon nominate an agent to help with their
banking temporarily. Banking and payments
The Irish Federation has published guidelines to assist clients.
who are hidden to manage their banking operations safely.5 5 Allied Irish Banks, Bank of Ireland,
Ulster Bank Ireland DAC, KBC and Permanent TSB have been established
dedicated phone lines to help those who wish to contact their
bench while cocooning.
To encourage contactless payment, most
retail stores and pharmacies in Ireland have implemented the
recently announced increase in the contactless payment limit of
€ 30 to € 50.6 6 The use of contactless is expected
payments, rather than cash, will reduce human contact and
spread of the virus. Certain banks are deferring or waiving charges
that apply to each contactless payment or are raising the number of
card transactions that will qualify for monthly rewards for the use of
This payment method.7 7
Changes in financial regulation policies.
Due to strict capital and liquidity capital requirements
ratio requirements implemented after 2008 Financial crisis, banks
they are now better capitalized. However, recently there has been
pressure on supervisory banks at European level to delay or resign
post-crisis banking capital and liquidity regulations for
provide free capital and more liquidity to companies
struggling to cope with today’s economy. In particular,
Bank executives are pressing for a delay or substantial
modification of the strict international capital regulations of Basel IV
which will require banks to start building capital levels
2021 and a delayed introduction to IFRS9 (rigorous accounting
standards that require banks to hold extra money regarding
loans to distressed borrowers). Lenders fear these burdensome
the measures will impede banks’ ability to free capital and
lending to companies struggling in today’s economy
weather. However, any relaxation of these measures is likely to be
temporary, since the measures implemented after 2008 have ensured that
Lenders are now better able to help struggling businesses8
The European Central Bank has implemented the following measures
in response to the economic climate created by Covid-19
pandemic:
- The ECB will allow banks to temporarily operate below the level
of the capital defined by the Orientation of Pillar 2, the capital
conservation buffer and liquidity coverage ratio. - Banks may partially use capital instruments that
does not qualify as ordinary capital Tier 1 capital, p. additional
Tier 1 or Tier 2 instruments to meet Pillar 2 requirements
– this presents a measure that was scheduled to come
effective January 2021, as part of the latest revision of the
Capital Requirements Directive.
The European Central Bank reminds banks to continue applying
strong underwriting standards, follow appropriate policies regarding
recognition and coverage of unprofitable exposures, and
carry out sound capital and liquidity planning and sound risk
administration.9 9 International cooperation and
Coordination of lender responses to the crisis is key in
make banking decisions
Landscape of the banking sector and Covid-19
The banking sector has demonstrated flexibility and adaptability in a
time of economic uncertainty and change. Such a positive commitment
such as publishing banking guidelines to help those who are
cocooning is a welcome development, as is the increase in
Contactless payment limits. As the global economy tries
The impact of the Covid-19 pandemic, bankers and regulators should
remain responsive and adaptable in unprecedented times.
Footnotes
one)
https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/Government-supports-to-COVID-19-impacted-businesses.html
2)
https://globalambition.ie/supports/innovation-support/sustaining-enterprise-fund/
3. https://www.rte.ie/news/2020/0318/1123788-banks-covid-19/
4)
https://www.rte.ie/news/business/2020/0331/1127574-banks-issue-warning-about-covid-19-scam-attempts/
5)
https://www.bpfi.ie/wp-content/uploads/2020/04/BPFI-Guide-Cocooning-During-Covid-19-Final-Copy.pdf
6)
https://www.rte.ie/news/business/2020/0401/1127838-contactless-limit-raised/
7)
https://www.rte.ie/news/business/2020/0330/1127226-permanent-tsb-card-limits/
8)
https://www.google.ie/amp/s/amp.ft.com/content/0827a58e-693d-11ea-800d-da70cff6e4d3
9)
https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr200312~43351ac3ac.en.html
The content of this article is intended to provide a
guide for the topic. Specialized advice should be sought.
about your specific circumstances.
POPULAR ARTICLES ON: Finance and Banking from Ireland
[ad_2]