# Banks announce 3 month payment holiday for those impacted by Covid



## Brendan Burgess (18 Mar 2020)

*Banks set out joint plan to support businesses and personal customers impacted by the Covid-19 pandemic*​




*Wednesday 18th March 2020* - The CEOs of Ireland’s five retail banks (AIB, Bank of Ireland, KBC, Permanent tsb and Ulster Bank), along with their representative body Banking & Payments Federation Ireland (BPFI), this afternoon met with the Minister for Finance,  Paschal Donohoe TD, and set out a joint-plan to support the thousands of businesses and employees across Ireland impacted by the Covid-19 pandemic.



The five retail banks are introducing measures to help businesses and personal customers whose personal and business circumstances have been impacted by the Covid-19 crisis. The banks are also working collaboratively to ensure that continuity of service plans are in place, that critical functions can continue, and that staff remain available to continue to service customers at this time. The banking and payments sector is fully committed to working together and collaboratively to ensure provision of branch and payment services during this challenging period.


The measures are as follows: 


1. Implement a payment break up to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviews depending on the scale and extent of the situation. Customers wishing to avail of a payment break should contact their respective bank.


2. The banks agree there is a need for a simplified application process to make it as easy as possible for businesses and personal customers impacted by Covid-19 to receive support from their banks.  We are working with all member banks to achieve this.

3. The banks want to ensure that any Covid-19 application for a payment break and further reviews will not adversely impact the customer’s credit record, and the banks reporting of these facilities. Banks want to avoid this and are meeting with the Central Bank of Ireland to urgently achieve a solution in this regard.

4. Banks will also defer court proceedings for three months.

5. The banking system stands ready to provide working capital support.

6. We have had initial discussions with Credit Servicing Firms and with those non-bank lenders who provide mortgages. Both the Credit Servicing Firms and non-bank lenders have issues which we need to address with the Central Bank of Ireland, but both are committed to working with the Government and industry to provide the flexibility that people need right now.


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## zibra82 (20 Mar 2020)

Hi there just wondering how is the break in mortgage going to work...I took a break once before back in 2011and i  started my year at 179500euros owe to the bank and finished the year at 180500 because the 3months grew back on the mortgage...so I had to pay interest again from the amount that I've already paid even though I paid 9000 euro that year (9months ) I finished the year with higher amount owe to the bank


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## Brendan Burgess (20 Mar 2020)

OK, it's probably worth recapping how a mortgage or any other loan works. 

This is what it normally looks like.  I have rounded the figures for simplicity


Interest chargedRepayments madeBalance1 March€100,000March 25th€300€100,300March 26th€500€99,800April 25th€290€100,090April 26th€500€99,590May 25th€280€99,870May 26th€500€99,370

When you take a payment holiday, interest continues to accrue. 


Interest chargedRepayments madeBalance1 March€100,000March 25th€300€100,300April 25th€310€100,610May 25th€320€100,930

So, at the end of the payment holiday, you will owe more money. 

The bank will usually recalculate your repayment at that stage, so that the balance is paid off over the original term of the loan. 

Brendan


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## Purple (20 Mar 2020)

Hi Brendan,

Assuming an interest rate of 3% what's the additional net cost per 100k borrowed over the 20 year mortgage if no repayments are made for 3 months? I would assume it's quite minimal.


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## RedOnion (20 Mar 2020)

Purple said:


> Hi Brendan,
> 
> Assuming an interest rate of 3% what's the additional net cost per 100k borrowed over the 20 year mortgage if no repayments are made for 3 months? I would assume it's quite minimal.


Assuming it's repaid over the original term, repayment would increase by 9.33 per month. Which adds up to 546 more than the deferred payment.


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## Purple (20 Mar 2020)

RedOnion said:


> Assuming it's repaid over the original term, repayment would increase by 9.33 per month. Which adds up to 546 more than the deferred payment.


So €112 a year. I don't think that would kill anyone.


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## Ballyjohn (20 Mar 2020)

Hi Brendan 
Called PTSB about my term loan today and they said term loans are not included in the payment break. Checked other banks and they include term loans. Any idea if they are included or not?


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## Brendan Burgess (21 Mar 2020)

Brendan Burgess said:


> 1. Implement a payment break up to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviews depending on the scale and extent of the situation. Customers wishing to avail of a payment break should contact their respective bank.



Seems clear to me that a term loan is included. 

Ring again.

Brendan


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## noproblem (21 Mar 2020)

As a lot of people will most likely avail of this, will it have any consequences to their credit rating? I did see that Brendan had it mentioned in procedure No 3  above, but it was very vary vague.


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## Brendan Burgess (23 Mar 2020)

You can apply for your payment holiday with AIB or EBS or Haven online 









						AIB shelves plan for maintenance and transactions fees
					

Bank has taken a number of steps to assit people dealing with coronavirus pandemic




					www.irishtimes.com
				




From Monday, AIB, EBS and Haven have made available an online process allowing customers to access a three month moratorium on home mortgage, personal and SME loans.


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## Sunny (23 Mar 2020)

noproblem said:


> As a lot of people will most likely avail of this, will it have any consequences to their credit rating? I did see that Brendan had it mentioned in procedure No 3  above, but it was very vary vague.



It should have no impact on credit ratings but that doesn't mean mistakes can't happen. The ECB have allowed banks exempt customers availing of these options from their non-performing classifications.


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## Leper (23 Mar 2020)

The banks are currently getting roasted on this issue on Joe Duffy. I reckon they tried to pull a stunt i.e. make some more money in the process. However, the good news is they have done a U-turn and are about to do some good, at last. I await further information, but the banks appear to be stepping up to the plate although reluctantly. But, in fairness to the banks they don't have a history of helping people who suddenly find themselves in arrears.


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## Brendan Burgess (23 Mar 2020)

Leper said:


> But, in fairness to the banks they don't have a history of helping people who suddenly find themselves in arrears.



Absolutely.

We all know that they have restructured only 120,000 mortgages over the last few years which proves your point Leper that they don't help people in arrears.  

Brendan


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## michaelm (23 Mar 2020)

For all the optics of the big 5 banks being summoned by the Minister it seems there was little substance to it.  

In relation to mortgages the banks will offer a moratorium on a case by case basis for 3 months and just add on the interest.  They offer this already. They will make money on it.  Then the FG Minister and the ex-FG Minister who is now the spokesman for the banking sector turn up on RTE for a willy-rubbing session to tell us that they are great fellas altogether.  All a bit underwhelming.


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## Leo (23 Mar 2020)

michaelm said:


> In relation to mortgages the banks will offer a moratorium on a case by case basis for 3 months and just add on the interest.



Do mortgage contracts allow them to approach this any other way?


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## Leper (23 Mar 2020)

Brendan Burgess said:


> Absolutely.
> 
> We all know that they have restructured only 120,000 mortgage over the last year which proves your point Leper that they don't help people in arrears.
> 
> Brendan



They wouldn't restructure mine when I most need it. Until I put my finger into the wound . . . . .


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## michaelm (24 Mar 2020)

Leo said:


> Do mortgage contracts allow them to approach this any other way?


You tell me.  I doubt there is any such difficulty they couldn't work around.  I'm sure they could set the interest rate to 0% for the duration of the moratorium, with the agreement of the mortgage holder.


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## Leo (24 Mar 2020)

michaelm said:


> You tell me.



I would have thought most people on here would be aware that terms of a contract cannot be unilaterally changed.



michaelm said:


> I'm sure they could set the interest rate to 0% for the duration of the moratorium, with the agreement of the mortgage holder.



How do you get 'agreement of the customer' without doing so on a case by case basis though?


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## RedOnion (24 Mar 2020)

michaelm said:


> For all the optics of the big 5 banks being summoned by the Minister it seems there was little substance to it.
> 
> In relation to mortgages the banks will offer a moratorium on a case by case basis for 3 months and just add on the interest.  They offer this already. They will make money on it.  Then the FG Minister and the ex-FG Minister who is now the spokesman for the banking sector turn up on RTE for a willy-rubbing session to tell us that they are great fellas altogether.  All a bit underwhelming.


You are of course, absolutely correct. This is all a massive plan by the banks to earn more interest... The banks would have been much better doing nothing. Let customers loose sleep over how they're going to pay their mortgage and put food on the table, go into arrears, screw up their credit ratings, and then force thousands of customers into providing financial statements and working out restructuring arrangements in 6 months time.

That would served people much better, wouldn't it?

For the first time in over a decade I'm not ashamed of being involved in banking. I'm proud of what the banks are collectively doing here, within the confines of what the Central Bank, EBA and accounting standards allow them to do. I've had no hand, act or part in any of this, but I've seen colleagues do in a few days what normally takes years to achieve in banking.

Now it's up to CBI to step up to the plate and get the changes / guidance needed so that this can be extended beyond 3 months and to those already in payment difficulty or in payment arrangements so that the banks don't have to start treating those customers as being non-performing if they provide the same arrangements to them.


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## JMJR (24 Mar 2020)

Apologies if this is not the way the system works, I am guessing here.
I am trying to see if a certain level of 'sharing' is intended to happen
If I understand it the banks will take a hit on liquidity i.e. for the three months when mortgages and loans are not paid  they will have to find the money to service their re payments? So there will be a cost somewhere that they will have to pay for.

John


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## JMJR (24 Mar 2020)

Politicians and the Central Bank. The devil is always in the detail!

Politicians 18 Mar 2020 press release taken from the first item of this thread
_Implement a payment break up to three months for business and personal customers affected by Covid-19, to be followed by ongoing reviews depending on the scale and extent of the situation_
This, to me, reads as inclusive meaning ALL business and personal customers. YMMV.

Central Bank Press Release 19 March 2020
_Recent decisions by the Central Bank, also as part of the Eurosystem and Single Supervisory Mechanisms, are designed to ensure monetary and financial stability and that the financial system operates in the best interests of consumers and the wider economy. These include wide ranging measures such as the launch of a €750bn Pandemic Emergency Purchase Programme yesterday, temporary capital and operational relief to banks across the Eurozone, and the release the Counter Cyclical Capital Buffer (CCyB) from 1% to 0%._

_In order to ensure that the benefit of these measures are passed on to households and businesses, the Central Bank today met with the Banking & Payments Federation Ireland (BPFI) and five retail banks1 to discuss these and other issues.
During this constructive meeting, both the Central Bank and the BPFI agreed that there is no impediment to the banks introducing a 3-month Covid-19 payment break for those affected by the pandemic._
This, to me, reads as inclusive meaning ALL business and personal customers. YMMV.

Central Bank Press Release 19 March 2020 .continued
*Payment moratoria*
_Banks will introduce three-month payment moratoria on mortgages, and personal and business loans for some business and personal customers affected by COVID-19._

This, to me, reads as the banks deciding who will receive their largesse. YMMV.

John


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## michaelg (24 Mar 2020)

After listening to the Joe Duffy show the other day I'd have zero faith in banks to do anything for anyone except themselves. 
I hope i'm wrong.


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## JMJR (24 Mar 2020)

Brendan Burgess said:


> *Banks set out joint plan to support businesses and personal customers impacted by the Covid-19 pandemic*​*Wednesday 18th March 2020* -
> now.


Hi Brendan,
I don't want to quote the complete post but wanted to ask where this text came from. It really does not relate well to the press release dated 18 March on the Dept of Finance website. [Incidentally this release is tagged as BETA - not sure if its the release is beta or the format!]
John


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## Brendan Burgess (24 Mar 2020)

It was from the email sent out by the BPFI 

Brendan


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## michaelm (25 Mar 2020)

RedOnion said:


> You are of course, absolutely correct. This is all a massive plan by the banks to earn more interest... The banks would have been much better doing nothing. Let customers loose sleep over how they're going to pay their mortgage and put food on the table, go into arrears, screw up their credit ratings, and then force thousands of customers into providing financial statements and working out restructuring arrangements in 6 months time.
> 
> That would served people much better, wouldn't it?


 Please resist misrepresenting my viewpoint.


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