Banking sector prepared for responding to COVID-19

New Zealand banks are ready to respond to the impacts of coronavirus, the Reserve Bank of New Zealand and New Zealand Bankers’ Association say.

The COVID-19 outbreak has the potential to impact the operations of New Zealand’s banking sector by affecting banks’ staff, their funding and their customers.

The Reserve Bank has asked all banks about their risk management approaches and preparedness for COVID-19. Reserve Bank Governor Adrian Orr said the responses show the banks are prepared.

“Much of the banks’ focus has been on staff health and safety, and their ability to sustain their operations should the outbreak expand significantly. However, the banks are also well attuned to any impacts on their customers’ businesses, employment, and incomes,” Mr Orr says.

New Zealand Bankers’ Association chief executive Roger Beaumont says customers financially affected by COVID-19, particularly small to medium sized businesses, are encouraged to contact their bank.

Depending on the customers’ individual circumstances potential options for support include:

  • Reducing or suspending principal payments on loans and temporarily moving to interest-only repayments
  • Helping with restructuring business loans
  • Consolidating loans to help make repayments more manageable
  • Providing access to short-term funding
  • Referring individual customers to budgeting services.

“Each bank will have their own credit policies and approach to providing assistance. It’s important for affected customers to talk to their bank as soon as possible. That gives banks the best chance of offering assistance. Helping customers through any financial stress depends on good two-way communication,” Mr Beaumont says. 

The Reserve Bank team are in regular dialogue with bank executives and are watching for signs of funding market pressures or emerging signs of credit stress.

“While we have not seen any significant pressures at this stage, we remain in regular contact with stakeholders across the financial sector. At the Reserve Bank we are prepared in our business continuity role to ensure a well-functioning financial system, including enabling access to cash, ensuring sufficient liquidity in the banking system, and managing a stable payments and settlements system,” Mr Orr says.

“All businesses should be preparing for possible disruptions from COVID-19. Think about how best to operate if staff are temporarily unavailable, or if suppliers have restricted stock, cash-flows are interrupted, and sales decline in some sectors,” Mr Orr says.