Key banking regulator APRA has moved quickly to support banks who defer or offer support to customers who are in difficulties in the Sydney and Victorian Delta variant lockdowns.
The move will ease the burden on the banks to increase existing loan loss reserves.
In a statement released late Monday afternoon, APRA said the relief it was offering to banks mirrored the process put in place in March, 2020 during the first pandemic.
“A number of authorised deposit-taking institutions (ADIs) have announced COVID-19 support packages that will provide affected borrowers with an option to defer their loan repayments. These packages have been offered to small business and home loan customers,” APRA said in its statement.
In response, APRA said it is providing regulatory relief to assist Authorised Deposit-Taking Institutions or ADIs “in supporting their customers through this period.”
“For eligible borrowers, ADIs will not need to treat the period of deferral as a period of arrears or a loan restructuring. This will apply to loans that are granted a repayment deferral of up to three months before the end of August 2021. This will provide banks and borrowers with additional flexibility to manage the period ahead.
“The measures apply regardless of whether or not the borrower has previously been granted a repayment deferral due to the impact of the pandemic.
“For transparency, APRA will require ADIs to publicly disclose and report the nature and terms of any repayment deferrals and the volume of loans to which they are applied. ADIs must also still continue to provision for these loans under relevant accounting standards,” the regulator said.
“Today’s announcement largely mirrors the temporary support measures APRA announced in march, 2020 This temporary treatment ended on 31 March 2021. APRA will release an updated prudential standard in July 2021 formalising this new treatment, in line with the approach taken in 2020.”
