As Moody's announced on Thursday March 26, the outlook for the entire banking sector in France has been downgraded, as it has already been for Belgium, the Netherlands and Italy. At the same time, French banks have announced their total mobilization to support their customers, particularly professionals. Focus on an unprecedented situation.
Support for professionals
While Moody's has placed most French banks, which until now had been in a relatively stable situation, under negative watch, they have decided to join forces to support their customers (retailers, professionals, SMEs, VSEs) during this major health and economic crisis.
At a time when the French economy has shrunk by almost 35% from its normal level of activity, the banks have decided to remain close to their business customers, particularly those who are experiencing major difficulties as their business is impacted by the coronavirus epidemic. The banks say they are ready to observe each case in order to find relevant solutions adapted to each professional to meet short-term financing needs.
In concrete terms, banking institutions have already decided on a number of measures:
- The introduction of fast credit approval procedures for companies with tight cash flow situations, within 5 days.
- 6-month deferral of credit repayments for companies, retailers and professionals.
- Cancellation of penalties and additional costs for deferrals.
- Bank branches and networks remain open to meet essential needs and services.
- Distributors are supplied and payment infrastructures are operational.
- Banks are asking customers to prefer contact by telephone, dedicated platforms or videoconferencing.
- Banking operations are automated and carried out remotely.
The banks' position for private customers
While all banking institutions are on hand to help companies hit by Covid-19, it seems that the situation is not the same for individuals. Unless you can telework and have your salary guaranteed in full, many employees are experiencing a reduction in pay. In practical terms, short-time working guarantees you 84% of your salary (80% for home workers). This pay cut will inevitably have an impact on purchasing power and consumption.
What can banks do for individuals? Can they benefit from an assistance scheme? At present, there are no plans to do so. However, the French Banking Federation (FBF) advises that in theevent of a difficult situation, individuals should contact their bank advisor, if possible by e-mail or telephone, or via the messaging system on their mobile application or their bank's website. The bank advisor will examine the situation and clarify the terms of their contract. Each situation can quickly deteriorate if the crisis lasts several months, as many contracts are covered under certain conditions of duration, usually 3 months. The Association Professionnelle des Intermédiaires en Crédit (APIC) recommends that banks implement emergency measures similar to those introduced for businesses.