Tuesday, May 19, 2020 Stamford, CT USA — U.S. banks are taking extraordinary steps to help companies survive the COVID-19 crisis and head off what could be the next major threat: a potential tidal wave of loan defaults.
Greenwich Associates and S&P Global Market Intelligence, the division within S&P Global that provides data, essential insights, and powerful analytics to help navigate the financial markets, conducted a survey of 36 wholesale banking divisions from 25 U.S commercial banks to better understand how banks are responding to the economic crisis triggered by the COVID-19 pandemic.
Almost all of the participating banks are offering business clients relief by deferring payments, extending repayment terms on loans and waiving fees on credit and cash management services. Key findings include:
- 96% of these banking groups are deferring payments on loan
- 84% are extending repayment term
- 84% are waiving fees on credit or cash management service
“Nearly every bank in the study is currently offering or plans to offer various forms of relief to their business clients,” says Don Raftery Greenwich Associates Managing Director and an author of Extraordinary Actions for Unprecedented Times - Bank Responses to COVID-19 Crisis in Lending, Deposits and Cash Management. “During PPP bankers have been working extremely long hours to help get loans processed and funded on incredibly short notice. For an industry that was vilified through the Financial Crisis, it deserves tremendous credit for rising to the occasion during the COVID crisis.”
In most cases, banks are offering this relief on a reactive basis, in response to requests from clients. However, some banks are acting proactively. For example, among banking groups servicing small businesses, a quarter of respondents are reaching out proactively to clients and offering to waive fees.