Slavko Caric, the Chairman of the Executive Board of Erste Bank, spoke online with media representatives about the introduction of a moratorium on credit payments, new provisions of the National Bank of Serbia (NBS) regarding the payment of pensions, and measures to assist the economy in the time of the coronavirus.
In his opening remarks, Caric emphasized that the Banking Association of Serbia has intensive communication with the NBS on recently introduced measures, recommendations for the behavior of banks in crisis situations, as well as measures for increasing the volume financing of the banking sector. On the other hand, as he noted, there is intensive communication with the Ministry of Finance on the package of measures, which involves increasing the lending activity of banks towards companies that will be damaged due to the current situation with the coronavirus.
– We are satisfied with the proactive attitudes and reactions, as well as communication with the NBS and the Ministry of Finance, first of all – said Caric.
He estimated that the moratorium on paying loans is primarily intended for citizens and companies, which because of the current situation, are left without income or their income has decreased dramatically.
– They certainly need to take advantage of this measure, as it allows them to have no liquidity outflow that would go into servicing the loan. On the other hand, those who are left with the same income as before the crisis find it more worthwhile to continue to settle their credit obligations as they have done so far. Therefore, this is not a matter of calculation, but of the liquid survival of anyone who needs to make a decision for themselves – said Caric.
Asked how the state of emergency will affect small and medium-sized enterprises, Slavko Carić noted that the answer varies from industry to industry.
– It will surely be welcome for all those in charge of the moratorium, so they will have no obligation to pay the loans. I hope that the initiative to delay various types of taxes will also be fruitful. Together with the Ministry of Finance, we are preparing a package of measures for such companies – small and medium – that would help them, on an individual request, with loans that would be given over the long term, two to three years, to bridge these 60 to 90 days until the situation it does not normalize – said Caric.
He noted that in many countries, it is a practice for the state to guarantee either 100% or to the maximum of total exposure to a return on funds to banks that would lend such loans. He found it not advisable, with regard to the stability of the financial system, to transfer such risk entirely to banks. There are practices from countries in the region, such as the Czech Republic and Austria, and something similar is happening in Croatia and Romania, Caric said.
When it comes to banks’ liquidity, Caric emphasized that it is extremely high at the moment. He recalled that all banks have been preparing for a potential new crisis since 2010, so their liquidity and capital adequacy ratios are at a very high level.
– These 90 days of loan termination will not create a critical problem for the banking sector as a whole. According to the first simulations, the liquidity of the banking sector will then remain at the level from excellent to satisfactory – said Caric.
He recalled that NBS organized two auctions this week. On one hand, banks with excess foreign currency liquidity can borrow from the NBS under extremely favorable conditions for dinars, and on the other, banks with excess government securities can pledge them with very small impairment and obtain liquidity from the NBS.
– For now, there is no need for the NBS to take additional measures, such as a reduction in the reserve requirement. NBS has a huge range of untapped liquidity options. In addition, the foreign exchange reserves of the NBS are around 13.7 billion euros, more than they have ever been, so we as a country and the banking sector have high liquidity.
Bearing in mind that the import to Serbia and foreign trade activity have been dramatically reduced, so the outflow of foreign reserves has been reduced. So, at the moment we have a large amount of both dinar and foreign currency liquidity – said Caric.
Speaking about the current NBS instruction on pension payments, Caric pointed out that Erste Bank will make every effort to reach all its retired clients as soon as possible. He reminded that, especially at the time of digitalization, banks are not technically equipped, and when it comes to the people, to pack money into envelopes and send them to the addresses of citizens, and that they must also take care of security in this context.
– What we can do is motivate our senior citizens and customers to use cards as much as possible for a much more secure payment method, digital channels and contactless payment. They also have an instant payment option, so anyone can transfer money to anyone they need, in a quick and easy way. We have every opportunity to throw cash, which poses a risk, as much as possible out of circulation – Caric concluded, eKapija reports.
