The industry has announced a raft of measures to support households and businesses in a move that could revive their reputation and ward off recession.
On 20 March, the Australian Banking Association (ABA) announced a “multibillion-dollar shot in the arm” for small business, with banks deferring loan repayments for small businesses affected by COVID-19 for six months.
That could put as much as $8 billion back into the pockets of small businesses as they go through what looks increasingly likely to be a recession.
NAB has also cut 200 basis points from the rate on new loans and all overdrafts on its digital business product QuickBiz, effective March 30, while reducing variable rates on small business loans by 100 basis points. NAB also announced reductions of up to 60 basis points to fixed rate home loans.
“These measures will provide significant relief to businesses and home buyers over the next six months as we all deal with this unprecedented situation,” said NAB CEO Ross McEwan.
“Businesses in particular need help and they need it now, so we have to come through with a range of measures. This support will provide cash flow relief so they can stay open, and keep people in jobs. One-third of Australia’s small to medium businesses bank with NAB and we are going to be there for them.”
In addition to similar measures, Westpac will also offer a $10 billion home lending fund to support the economy.
“We are determined to assist customers through this extraordinary period,” said Westpac acting CEO Peter King.
“This is a once-in-a-lifetime event and a united response by government, regulators and corporate Australia is exactly what we need.”
The coronavirus is the opportunity of a lifetime for Australia’s banks to revitalise their reputation following the release of the royal commission final report and high-profile enforcements by AUSTRAC against CBA and Westpac.
“These are extraordinary times,” said ABA CEO Anna Bligh.
“Banks stand at the ready to do whatever they can to help the community through this. Ultimately, that’s what the community wants to see. They’ll make their own judgements about how we all get through this, but it’s going to take co-operation, goodwill, and a really hard determination to lean into the issue.”
The measures are supported by APRA’s decision to relax its expectations on its Common Equity Tier 1 capital ratios.
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