Bank administrations are increasingly concerned about the coronavirus’ economic repercussions and primarily whether borrowers will be able to continue paying their loans in a timely fashion.

Customers, mainly business people from the tourism industry, have already started calling their bankers asking to be briefed on the day after and what support they can expect. Business that have shut down because of imposed restrictive measures are in dire need of liquidity.

Business people fear that they won’t be able to meet obligations because of the new state of play. Bank managers are looking at all possible scenarios aiming to help clients overcome the liquidity problem that has been created but avoiding any further rise of non-performing loans.

Bankers do not want the coronavirus side effects to upset the downward course of red loans. The challenge is to help clients, for example through restructuring of loans, but without violating supervisory guidelines.

Both Bank of Cyprus and Hellenic Bank insiders have sent the message they will stand by their clients to enable them to boost their liquidity at a time when the whole economy is in quarantine. Bank of Cyprus is reportedly ready to release a product that will boost the liquidity of shut-down businesses.

However, the administrations of both banks are in constant coordination with the Central Bank of Cyprus on this issue. They would not want loan payments to be suspended and that’s why various views are exchanged.  Such as increasing the liquidity of businesses through an overdraft or even partial suspension of instalments for a short period where financial data fully justifies it.

In some cases, loans will automatically turn from “green” to “red” if banks fail to suspend instalments for a short time.

The banks want to help clients in various ways but they must also have the consent of the Central Bank. And that all initiatives taken will be targeted and strictly business-related.