New Measures for Individuals and Businesses

Minister Donohoe outlines measures to support individuals and businesses impacted by COVID-19

Published: 18 March 2020
From: Department of Finance

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, today (Wednesday) welcomed the ongoing work of the Central Bank of Ireland, Banking and Payments Federation Ireland (BPFI), and the Revenue Commissioners to support customers in difficulties due to COVID-19.

“Today, I had a constructive meeting with the five CEOs of our retail banks and with Banking and Payments Federation Ireland (BPFI). I note that a meeting will also be held with the Central Bank tomorrow. I welcome the ongoing work that is taking place to assist customers who are impacted by COVID-19.

“The proposed actions by the banks will build on the government response, and the European Central Bank’s monetary and regulatory policy measures to deliver real support to individuals, SMEs and companies in these difficult times. These actions are the translation of European and national policies into individual supports that best assist the needs of our bank customers in the period ahead.”

Support for bank borrowers

The banking sector’s coordinated approach to supporting customers whose income has been impacted by COVID-19 is to be welcomed. The range of supports proposed by the BPFI, and to be discussed with the Central Bank, are customer focused so as to cater for the different impacts of COVID-19 on each individual customer.

These proposals include:

flexible arrangements, including a payment break for mortgages and other loans. Customers affected by COVID-19 must contact their bank to discuss the flexibility available to them, including the possibility of a payment break of up to 3 months
support for buy-to-let bank customers with tenants affected by COVID 19 – customers with rental property in which the tenants are adversely impacted by COVID-19 will also be provided with flexibility including with an opportunity to seek a payment break of up to 3 months, which will allow them to exercise due levels of forbearance to their tenants
extensive supports for SME customers – banks are working to ensure a wide range of credit, cash flow and supply chain supports are offered to businesses who are trying to manage the pressures arising from COVID-19. A deferral of up to 3-months on loan repayments will be of assistance to many businesses
in addition, the banks are adopting a customer-focused approach to these businesses with a wide variety of tailored supports including extensions of credit lines, risk guarantees, and trade finance

These supports complement the range of Government supports available through the Strategic Banking Corporation of Ireland.

Customers facing difficulties due to COVID-19 are urged to contact their bank as soon as possible to make alternative arrangements that will assist them to come through this difficult period. Banks will work to ensure that these supports are made available to borrowers in a straightforward manner and aligned to the processes rolled out by the Department of Employment Affairs and Social Protection.

Central Bank Prudential Policies

The Minister welcomes the Central Bank’s decision to reduce the Countercyclical Capital Buffer, from 1% to 0%. This decision will free up bank capital that can be used to provide credit, and to restructure and extend the loans of bank customers, both individuals and SMEs.

The release of this regulatory buffer by the Central Bank in this time of need shows the importance of the Central Bank’s introduction of the buffer two years ago in stronger economic times.

The impact of the reduction of this buffer to 0% will free up in excess of €1 billion of bank capital. This capital amount has the potential to support approximately €13 billion of restructured lending to bank customers that need assistance. Combined with the relaxation of Pillar 2 guidance and the Capital Conservation Buffer by the European Central Bank, the reduction in this buffer will ensure that banks have significant resources at their disposal to support borrowers.

The Minister also welcomes the Central Bank’s ongoing work with European colleagues to ensure that bank customers, whether personal or business customers, impacted by COVID-19 are extended forbearance without their loans being classified as defaulting.

The Minister has also decided to defer the introduction of the Systemic Risk Buffer while all of the key players in the banking sector are working together to support customers.

The actions taken by the Central Bank and Single Supervisory Mechanism to allow banks to focus on the task of supporting their customers is welcome as it strikes the right balance between allowing banks to meet their customers’ immediate needs, while ensuring there is proportionate regulatory oversight.

BPFI actions to ensure operational continuity

The Minister acknowledges the extensive work that has been ongoing across the BPFI and its members to ensure the continuity of banking services to the public. The proactive approach of the BPFI and its members in working together should minimise possible disruption to payment services.

Changes to assist Public Health Policy

In order to support public health policy, the Minister is requesting that industry increase the limit on contactless payments to €50. This change covers most transactions given the average value of contactless transactions is €12.23 and the average value of debit card transactions is €41.52.

Deferral to stamp duty

The Minister has decided to defer the collection of stamp duty on credit cards to July, which is normally levied in April, for which he will legislate for in due course.

Non-Bank lending

The Minister welcomes the fact that initial discussions with Credit Service Firms and with those non–bank lenders who provide mortgages have taken place with the BPFI. Both the Credit Service Firms and non-bank lenders have issues which need to be addressed with the Central Bank of Ireland, but both are committed to working with the government and industry to provide the flexibility that people need at this time.

The Minister concluded by stating:

“We are all acutely aware of the impact of this public health crisis on our fellow citizens, both in terms of serious illness but also in terms of income loss.

“The proposed actions provide real support to those most impacted by COVID-19. It is incumbent on those citizens who continue to receive their full income to do their part by paying their bills, taxes, and loans on time, so as the maximum amounts of supports are available to our fellow citizens who are most in need.

“We must work together and support each other.”

Minister for Housing, Planning and Local Government, Eoghan Murphy TD, in support of the measures announced today added:

“Today’s announcement by the banking sector represents a first step in protecting both tenants and landlords in the current crisis.

“These actions remove pressures on landlords who have shown a willingness to exercise forbearance in relation to tenants who are experiencing difficulty with rents due to the loss of income resulting from contracting the COVID-19 virus, being in self-isolation as a result of the virus or having lost all or significant employment.

“I have spent the last number of days engaging with both landlords and tenants organisations as well as charities and NGOs and I expect to be in a position to announce further measure to compliment today’s announcement shortly.”

New Measures for Individuals and Businesses