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Banking in times of health crisis

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A robust banking system can provide the economy with the strength needed for a quick recovery from crisis. At the same time, crisis situations create unexpected opportunities and Steven van Groningen, President and CEO, Raiffeisen Bank, hopes the banking community can exploit those favorable circumstances to its advantage. In an interview with Business Arena, the Raiffeisen Bank official looks at the challenges and prospects in the context of the coronavirus epidemic.
How is Raiffeisen Bank going to affected by the recession expected to hit Romania, the EU and other countries?
I’m glad you asked this question. I am not worried, and I believe we are going to overcome whatever is coming our way. I never look at short-term factors, when I talk about our bank’s business performance. However, I think I should focus a little bit on the 2019 results we announced on March 18, in line with our financial calendar. Of course, today, when COVID-19 has erased growth forecasts, ushering in the prospects of economic downturn, those figures seem somehow unnaturally positive or already outdated. But it’s not like that! Our solid financial condition and very good capital position have allowed us to enjoy a favorable start to the year, despite the prospects for a severe recession. With the necessary support from the authorities in such circumstances, and with the combined effort of our colleagues, we are in a position to support our customers and suppliers, who, in turn, must support their own suppliers, customers and employees. That’s what we all need to do now.
I would like to speak a little more about what happened this March. We decided to help as much as we can, wherever we can. The bank sped up all payments to its partners, suppliers and the state budget.
On March 25, 2020, we transferred over 27 million lei to the state budget, representing taxes and contributions, even though the go­vernment allowed a payment deferral of up to 30 days after the state of emergency is lifted.
We are aware that the population is making efforts to comply with the rules to prevent the spread of the virus and the activity of some companies has been severely affected by those measures. From that perspective, the Government’s decision to extend the tax payment deadline was justified and welcome. On the other hand, I think that all the companies that can pay their taxes and contributions on time must do so. In March, we also made payments of around 85 million lei to all our suppliers and partners. Of the total, nearly 40% represent payments before scheduled due dates.
Now it is very important for us to support our customers, partners, suppliers, so they can, in turn, support those who depend on them, and preserve as many jobs as possible. We have made many payments before scheduled due dates in order to support the business environment. We know for sure that if we all work together responsibly, we will easily overcome this difficult health crisis, and the economy can recover faster. Last but not least, we decided not to distribute dividends this year and keep a solid capital position.

What measures have been implemented to since the beginning of the crisis?
What is the best approach in such circumstances?

The situation created by the public health crisis has major implications in society at all levels, but two of them are now essential for everyone: the public health and the economy. From the very start our main concern was to protect our employees and customers from the spread of the virus as best we could.
I believe there is no one, individual or company, who hasn’t radically changed their daily life, in this common and unpre­cedented effort to limit the spread of the epidemic. In the short term, this has been our main concern and priority. In other words, protecting employees and customers, and maintaining continuity, both in terms of infrastructure and systems, as well as people. For this, we have prepared business continuity plans and we have implemented them.
We’ve closed down some small agencies in very busy locations and reduced the opening hours of others, so that we can keep a number of units open, providing a reasonable level of services and products to our customers, while maintaining additional staff in reserve at all times. Technology is helping us a lot, especially at our headquarters, where the majority of our colleagues can work from home. We have also relocated a number of teams to other offices. We are adapting to the present conditions every day, complying with the regulations and the measures taken by the authorities, protecting the employees and the customers, continuing to offer our services and products.
As I have already mentioned, another important concern for the bank is to support customers, partners, suppliers and the state budget during this difficult period. We are making daily adjustments so that we can adapt as best we can to the situation and overcome the difficulties. I have confidence in the huge effort made by scientists worldwide to find the right vaccines and treatments. I know the Romanian business environment well, and I can say that, compared to the previous crisis, in 2008-2009, we are better organized, better prepared and more aware that a joint effort is needed. I think it is clear for everyone that the number one objective must be the preservation of the created economic value and of jobs, by allocating resources where they can generate the greatest positive effects. From that point of view, I am optimistic.



What actions have been taken to support borrowers, individuals and companies? 
Most of our customers, individuals and companies, already have the option to ask for a one- to three-month moratorium on loan repayment. We included this stipulation in our contracts after the 2008-2009 financial crisis.
Basically, our customers have had the possibility to call our call center or send us an email, asking to defer payments on their loans for one to three months, when they encounter financial difficulties. We have already approved such requests from 15,000 customers. The important thing is that the procedure does not involve additional operations, such as signing of documents, contract addendums, visits to our agencies or extra costs. Customer calls to our call center and emails are recorded, and they are legally valid. We have extended access to these services to other categories of customers, who previously did not have this option in their contracts. People need to be confident that we have solutions for any customer who needs them. At the same time, only customers who really need a moratorium on loan repayment should use that option. 
For SMEs, we have created tailored and quick solutions, and so have our colleagues at Raiffeisen Leasing. SMEs can benefit from a three-month deferral of capital installments or three- to 12-month extension on credit lines that are due to expire.
My colleagues keep in touch our corporate customers in order to understand what we can do to help them. Here things are quite complex, there is no one good solution for everyone, and the priority now lies with the sectors that suffer the most. What should corporate customers do? They should contact the bank as soon as possible, so that we can have a clear picture of their situation, using the usual channels. I am certain that companies have learned their lesson after 2008, and they are aware of their responsibilities towards their own employees, suppliers, customers and creditors. One important issue raised by the banking community with the regulatory bodies is the need for a change in prudential requirements, so that we can support customers quickly. From that point of view, the signals we received from the regulatory bodies are very good.
I would also like to say a few words about the Romanian banking community. I am glad to see that everyone’s efforts are pulling in the same direction: to protect employees, to help customers, to find quick solutions, to maintain the level of services, to work with the authorities. We continue to be in competition business-wise, but from a professional and human point of view I feel the need to congratulate all banks for their extraordinary effort and quick reaction.

What happens with the customers who do not have access to digital services?
Do you have a digitization strategy for those customers?

We still have agencies that can serve our customers throughout the country. We have temporarily closed down some agencies where either the customer service area was insufficient to allow social distancing or several agencies operated in close proximity to each other.
In the meantime, we are accelerating the changes to all operational flows that involve direct customer interaction. We hope the authorities will support these efforts too, because the physical presence of customers is required under the current legislation for a number of operations. The business and banking communities have already made proposals in this regard to the authorities, so we can accelerate the digitization process, which is an opportunity for the economy and the society as a whole. Clearly the world is not going to be the same after this crisis, but that doesn’t have to be a bad thing. We will all make a progress, even if we don’t have an easy road ahead of us.

This is also available in our print edition of Business Arena

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