Business, banks at loggerheads

The Bank of Namibia will investigate whether commercial banks have adopted a “burden-sharing stance as was hoped for”, the NCCI says.

15 May 2020 | Business

… some banks are now classifying clients who were in good standing pre-Covid-19, as risks unworthy of support … - NCCI

Jo-Maré Duddy – The Namibian Chamber of Commerce and Industry (NCCI) has complained to the Bank of Namibia (BoN) that commercial banks apparently weren’t delivering on their promises of financial support in the Covid-19 crisis.

The chief executive officer of the NCCI, Charity Mwiya, yesterday issued a statement, saying the umbrella organisation informed the deputy governor of the BoN, Ebson Uanguta, about the issue last Friday during a virtual meeting with the central bank.

Uanguta on 26 March announced a loan payment moratorium which allows banks to grant clients payment holidays from 6 to 24 months. These holidays apply to the principal amount and interest and are granted at commercial banks’ discretion.

According to Mwiya, the NCCI has received a “high number of concerns” about banks “making promises of support to businesses, but then not delivering on those promises”.

Banks are swift in offering debt servicing holidays, but these offers preclude interest reduction, Mwiya said.

“[The] NCCI says some banks added salt to injury by adding administrative charges, treating a payment holiday as a new loan or credit facility, in doing so expecting borrowers to incur new debt to service old debt,” the statement read.

It continues: “[The} NCCI pointed out some banks are now classifying clients who were in good standing pre-Covid-19, as risks unworthy of support or debt rescheduling since the implementation of Covid-19 lockdown measures.”

Banks comment

Reacting to the NCCI’s statement, the president of the Bankers’ Association of Namibia (BAN), Sarel van Zyl, said all BAN member banks have honoured the national call to support their clients in good standing with specific Covid-19 related credit relief measures following high-level engagements with the ministry of finance and the BoN.

“We have all certainly seen an increase in the number of applications from our clients, and our teams are steadily working through these applications,” said Van Zyl.

BAN is “keen to engage the NCCI leadership as national corporate members of the organisation, to gain an understanding on the business queries that they are referencing. Our commitment to support clients is absolute,” he said.

According to the NCCI, the BoN will look into the matter and assess if banks are “indeed adopting a burden-sharing stance as was hoped for, so that their clients aren’t worse off if they took-up loan holidays than before rescheduling debt”.

The NCCI and the BoN will meet again after the central bank has engaged with commercial banks, Mwiya said.

“In the meantime, NCCI invites businesses across the country, irrespective if they are members of the chamber or not, to come forward with concerns encountered with their banks,” she said.

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