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Europe stays resilient

Europe stays resilient

​​​​​Banking forms part of solution to handle Covid-19 effect, 

EU can help banks navigate choppy waters ahead


>> Learn more about efforts by savings and retail banks

>> See overview of official crisis policy responses


BRUSSELS, 28 May 2020 – Savings and retail banks in Europe form part of an effective response to Covid-19,  ESBG Managing Director Chris De Noose said today at the European Commission DG FISMA roundtable.  

ESBG members help people by providing vital banking services, he said, and support inclusive societies and sustainable economic growth. Staying by their customers' side, Europeans have received extraordinary support by some 900 savings and retail banks in more than 20 countries.

Banks acknowledge swift response by national, European authorities

Banks' efforts to provide vital banking services, support inclusive societies and sustainable economic growth have been boosted by swift actions wielded by the European Union and national authorities. Those actions provide support for locally focused, retail-minded institutions to stay on mission, nourish the real economy, and steady communities and regions no matter what shocks come their way. Those EU and Member State authorities include the European Central Bank and European Banking Authority .

De Noose said: “Many authorities have reacted quickly and have provided some much-needed flexibility, support and clarifications. The private sector has also been highly engaged and committed to support the 'real economy 'as much as possible in these challenging times. Banks express gratitude to governments and supervisors for the swift actions that allowed our industry to be part of the solution."

Sitting with dozens of stakeholders that included financial sector associations along with consumer and business bodies, De Noose outlined the rapidly deployed measures taken immediately by savings and retail banks that serve 150 million Europeans. Those banks provide breathing space and reason for hope as Covid-19 ravages economies, supply chains and fiscal positions of governments by applying measures such as loan repayment moratoria, ensuring digital banking remains secure, and financing to keep businesses afloat. The first call of many businesses when the pandemic struck, Europe's locally rooted banks, with widespread presence – including remote areas – form a strong buffer. Granting loan deferrals, members sometimes saw need to extend the period beyond the timeline foreseen of moratoria initiated by public authorities, such as from six to 12 months. Issuing many new loans, they also help SMEs set up online payment solutions and digital platforms as people gravitate to the Internet to fend off virus exposure.

Despite work done so far, the coming months will prove “difficult", during which risks will have to be managed responsibly, he noted. All stakeholders will be affected. That's why policymakers need to address banking rules so that banks can cope and people and SMEs can remain resilient throughout the pandemic.

​De Noose added: “The European Union needs to take a good look at the existing banking regulation and determine what helps the economy and what does not, which includes Basel III."

Savings and retail banks: standing on the side of customers

Savings and retail banks in Europe reported to ESBG that loan deferrals and moratoria help both private and corporate clients. Member banks have issued a flood of new loans despite the economic downturn and set up online payment solutions and digital platforms for small- and medium-sized firms. On payments, savings and retail banks upgrade debit cards to execute contactless payments. People's income streams are smoothed out thanks banks paying unemployment benefits and pensions in advance. Commissions for the use of ATMs have been eliminated. ​Specific examples from ESBG members include:

  • GERMANY: German savings banks in March issued €17 billion new loans to companies, self-employed and private individuals, a 22.3 per cent spike compare to March 2019. They granted by end of April some 309,000 deferrals for customers regarding interest and principal payments. To help keep local high-street shops afloat, savings banks offered customers a chance to buy gift cards to redeem at participating shops at a later date.

  • FRANCE: Savings banks implemented a large-scale financial support plan for the public hospital sector. This support plan of a billion euros includes cash credits that can be mobilised in 48 hours, an offer of medium- and long-term financing as well as a credit solution for very long term investment needs on terms of up to 40 years. More than 27,000 local authorities and 750 public hospitals are supported by French savings banks experts on a daily basis.

  • ITALY: Italian savings banks foundations set aside – in grants – some €50 million to sustain non-profit organisations and to strengthen the much-stained national health system to tackle the Covid-19 crisis.

  • LUXEMBOURG: Until mid-May, banks granted moratoria on loan repayments to more than 14,000 companies, amounting to €3.4 billion, thereof 20% on the account of ESBG local member Luxembourgish savings banks – BCEE - Banque et Caisse d'Épargne de l'État.

  • SPAIN: Funds totalling more than €47 billion were mobilised through mid-May via new loans and other forms of financing.

 

Unwavering commitment to society

Savings and retail banks' remain socially committed, supporting the public welfare and local societies. Built within their mandate, even in challenging periods, ESBG banks go beyond, helping improve customers' income situation, such as by paying unemployment benefits and paid pensions in advance. In some cases, banks provide additional training to people to help master digital banking services where demand soared and use became more widespread during the crisis. Relatedly, they in some cases teach people digital skills and provide special services for the so-called risk group / elderly people.

​De Noose concluded: “We do whatever we can to continue serving Europeans in the best possible way. However, the next weeks and months will remain very challenging. For example, the amount of non-performing loans could increase. We may only be at the beginning of a longer-lasting, rough economic period. Savings and retail banks have been always open and eager to engage in dialogue with business and consumer associations as well as EU and national authorities to work out good solutions."

How policy can help: regulatory relief, postpone implementation of already-completed, published laws

Savings and retail banks see two main ways to help them during the pandemic. First, need exists for some additional regulatory relief measures – for instance in the area of prudential area – so banks have more room for manoeuvre to help coronavirus-hit companies. Second, postpone implementation of application of already-finalised and published laws not yet applicable or implemented, a situation that forms a great source of uncertainty by the banking sector.

De Noose concluded: “By granting some delays, banks would be in the position to have more staff members dedicated to assisting their customers even faster during this tough period.

​“A clear need exists for European policymakers to acknowledge a valuable asset Europe holds: a sound retail banking infrastructure. A diverse financial landscape specific to Europe – which includes 'retail, regional, and responsible' ESBG member banks – should be taken into account when designing legislation European level, including when Basel standards need to be implemented. If not, then retail banks and the people they serve at local level may face an untimely tougher road ahead."

 

Notes to editor:

About EU Commission Roundtable

The Commission roundtable aimed to kick-start a dialogue on practical relief measures taken by the financial sector to alleviate the impact of the COVID-19 crisis on consumers and businesses. The Commission invites participants to an open discussion about relief measures offered and applied at national level. According to the Commission, the roundtable should concentrate on private sector initiatives and will not discuss adaptation of the prudential framework, relief measures released by public authorities nor those involving public funding in the Member States. The roundtable did not discuss broader recovery measures for the medium- to long-term. During the meeting, the Commission sought to hear from the financial sector representatives like ESBG about the practical implementation of relief measures, their uptake, impact on their activity, and their effectiveness in providing material support to the affected groups. For attendees, it provides a useful forum to learn about challenges related to the provision of measures and what possible gaps as well as bottlenecks exist. The Commission's intention at the Roundtable will be to address identified issues and gaps by facilitating and encouraging the dialogue between the parties represented at the meeting.

 

About ESBG

ESBG represents the locally focused European banking sector, helping savings and retail banks in 21 European countries strengthen their unique approach that focuses on providing service to local communities and boosting SMEs. An advocate for a proportionate approach to banking rules, ESBG unites at EU level some 900 banks, which together employ 656,000 people driven to innovate at 48,900 outlets. ESBG members have total assets of €5.3 trillion, provide €1 trillion in corporate loans, including to SMEs, and serve 150 million Europeans seeking retail banking services. ESBG members are committed to further unleash the promise of sustainable, responsible 21st-century banking. Learn more at www.wsbi-esbg.org



European Institutions; European Supervisory Authorities (EBA-ESMA); Retail payments; Digitalisation; Innovation; Innovation Hub