South African banks begin talks to curb virus impact
JOHANNESBURG - South African banks are beginning discussions around the industry’s payments infrastructure and logistics to keep their operations going as the nation braces for a 21-day lockdown to contain the coronavirus.
These initial meetings will probably be followed by wider engagements to cement the banking sector’s response, as the government announces economic measures to aid businesses and consumers, Investec Bank South Africa Chief Executive Officer Richard Wainwright said in a phone interview.
The talks begin a day after President Cyril Ramaphosa said banks are exempt from antitrust rules to coordinate their response. The country is taking steps to manage the impact of the outbreak and will shut down most economic activity from midnight Thursday.
The president also announced other measures such as a four-month tax subsidy for low-income workers, and the establishment of a solidarity fund that will enable businesses and individuals to contribute money to assist the response effort. Financial services are among the essential functions that will continue operating.
Across the industry there is “broad agreement that we are all going to try and do our absolute best to keep people employed,” said Wainwright, who was working from home. “Where companies are good companies and in good standing with their banks, I am sure the banks are going to be quite lenient.”
Investec Bank expects to have a maximum of 10% of staff working from its premises during the lock-down period, Wainwright said. The Johannesburg-based lender will also continue speaking to distressed clients to offer bespoke solutions.
Other banks, including Absa Group Ltd., Capitec Bank Holdings Ltd. and FirstRand Ltd., have also invited customers to reach out proactively and ask for help. Standard Bank Group Ltd. has offered small businesses and students a three-month payment holiday.
Nedbank Group Ltd. CEO Mike Brown said on Monday that the South African banking system remains sound and that lenders would continue to engage the government on potential interventions.
But South Africa’s weak fiscal position means that instead of immediately launching into a full stimulus package, the government could “wait to see how this pans out over the coming days and weeks,” Investec’s Wainwright said. “They will keep their powder dry.”