Saudi Arabia Tells Banks to Support Businesses to Avoid Job Cuts
Saudi Arabia’s central bank is ordering lenders to provide concessional loans to businesses grappling with the fallout of the coronavirus so companies won’t have to cut jobs.
The Saudi Arabian Monetary Authority wants banks to immediately put in place a lending program for at least six months to “assist in maintaining employment levels,” according to a document sent by the regulator to lenders and seen by Bloomberg. Banks should also provide relief on debt repayments for any customers that have already been dismissed, SAMA, as the central bank is known, said in the circular.
The measures “will come at a cost to shareholders as banks’ revenue will be put under more pressure by the waivers on fees and some interest charges,” Bloomberg Intelligence analyst Edmond Christou said in a note.
Central banks around the world have unveiled emergency stimulus packages as the pandemic forces authorities to restrict international travel and go into full lockdown to slow the spread and prevent it from overwhelming health services. Saudi Arabia is the only G20 country that has responded to the economic impact of the virus by cutting spending.
SAMA also unveiled a 50-billion riyal ($13.3 billion) program to help private businesses in the kingdom that’s also dealing with a crash in oil prices.
SAMA also postponed the implementation of outstanding Basel III standards to help banks respond to the coronavirus crisis.
Other highlights from the circular:
- Banks should waive all fees and charges from the use of digital channels for up to six months, including an activation fee for new customers
- Minimum balance charges for all bank accounts to be waived for up to six months
- No fee to be charged for at least six months to refinance existing facilities or break an existing loan or deposit agreement
- Review and reassess credit card interest rates and other charges for all customers
- Refund customers who may need to cancel travel bookings made on their credit, debit or prepaid cards
