Banks prepare to offer further relief to those struggling with payments
A second three-month payment break for borrowers hit by the Covid-19 outbreak could be unveiled within days, AIB chief executive Colin Hunt has told the Irish Independent.
The first three-month repayment holiday was announced in March and has seen a massive uptake.
But with much of the economy shut down and job losses and temporary layoffs continuing to soar, banks are preparing to extend the scheme.
AIB alone has processed "well over 40,000" payment breaks for customers since the Covid-19 outbreak, Mr Hunt told the bank's shareholders yesterday, at an AGM held over the telephone because of the pandemic restrictions.
It is understood talks are now at an advanced stage between the Central Bank and the Banking and Payments Federation of Ireland (BPFI), representing all of the main banks, to hammer out how best to roll over the current repayment break scheme.
Key elements of the scheme include that the process is quick with relatively little paperwork required of borrowers, and that banks do not have to class loans with an agreed payment break as non-performing - which would make it costly for lenders.
It is also vital that borrowers are not classed as having missed payments on the Central Bank-controlled Central Credit Register - so their ability to borrow money in future is not hurt.
It is understood that ensuring those criteria are carried over for a further three months, as well as that the extended scheme complies with European Banking Authority (EBA) rules, is the core of the current round of discussions.
The extended scheme would be available both to customers who already have a payment break and new applicants.
The initial three-month break was spearheaded by the BPFI in agreement with the Central Bank.
It was the first time all five main banks had agreed to offer an industry-wide payment holiday.
Mr Hunt told the Irish Independent after yesterday's AGM that he expects details of a further payment break could be announced within days.
"Pressing pause until there is more certainty" has been what customers have needed, the chief executive added.
Mr Hunt said that payment breaks rather than overdrafts or new debt have emerged as the key support that most borrowers have requested since the Covid-19 outbreak has smashed through the Irish economy.
He confirmed the scale of his own bank's customer engagement activity at the AGM, which was held over the telephone as a conference call with shareholders instead of at a physical location for the first time because of the Covd-19 restrictions.
AIB has so far processed payment break requests for 16,000 mortgage accounts, 12,000 SME customers and for 12,000 personal customers, he said.
AIB will publish financial details on May 12, including results for the first three months.
Mr Hunt said the bank had rapidly shifted focus to create the infrastructure to process applications from customers, including through digital and telephone channels.
Footfall in AIB branches is down around 50pc since the crisis started, but the bank will keep the network open, he said.
"There is still a cohort who want to bank in branch, we are not going to close our doors on them. It is also symbolically important that we are open," he said.