AF - 2020

Author:  Jacques Celliers
CEO FNB
10 July 2020

South Africa’s big banks looking at additional debt relief options for homeowners  

South African banks are looking at a range of options, including debt consolidation, to avoid defaults when coronavirus-related debt relief measures end.

Speaking to Reuters, FNB chief executive officer Jacques Celliers said that the lender was worried about the impact of job losses and wanted to avoid a wave of property evictions that would affect prices.

“We’ll have to be very clever between all of us as to how we navigate the property game,” Celliers said.

Anton de Wet, chief client officer at Nedbank said debt consolidation on home loans was a possibility and that term extension, as well as other solutions, could be discussed with customers individually.

Standard Bank and Absa also indicated that they were looking at debt-relief solutions.

Mortgages make up 59% of R489 billion in loans considered at risk, according to the Banking Association of South Africa (Basa).

On Tuesday, the association said South African banks have approved more than R30.6 billion in relief to individuals and businesses affected by the Covid-19 pandemic and national lockdown.

Separately, over R10.6 billion has been extended to distressed businesses under the Covid-19 Loan Guarantee Scheme, it said.

“Cash flow relief for eligible individuals and businesses is critical to the preservation of jobs and businesses and to maintaining a functioning economy,” said Basa managing director Bongiwe Kunene.

“Banks hold in trust the salaries and savings of South Africa’s workers, professionals and businesses. It is therefore essential that we continue to extend credit responsibly and avoid blanket debt write-offs or any other actions that might place depositors’ funds at risk or otherwise undermine the integrity of the financial sector.”

Basa said that as of 27 June 2020, individual customers had received R18.26 billion in relief, with banks approving 2.4 million (82.7%) of 2.9 million applications for assistance.

Relief granted to commercial, small and medium enterprises amounted to R12.39 billion, with banks approving 132,508 (95.5%) of 138,675 applications for assistance.

To date, banks have also approved just over R10,6 billion in concessionary loans for 7,496 qualifying small businesses in terms of the Covid-19 Loan Guarantee Scheme, which was launched in mid-May.

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