The Financial Conduct Authority, Bank of England and HM Treasury have written to banks across the UK urging them to extend lending despite uncertain economic conditions.
Rishi Sunak, the chancellor of the exchequer, Andrew Bailey, the governor of the BoE, and Chris Woolard, acting chief executive officer of the FCA, today (March 25) wrote to the CEOs of UK banks updating them on the Covid-19 situation and encouraging them to continue lending to businesses throughout.
They wrote the priority for banks and building societies should be to pass on any benefits from government measures to businesses and consumers.
To do this it is important that banks are willing to maintain and extend lending despite the current economic conditions, they wrote.
This helps ensure that companies whose business models were viable before coronavirus hit are still viable once it is over.
The letter stated: “Continued communication and cooperation will be paramount over the coming weeks and months.
“The Bank of England and FCA will be monitoring the situation closely and will be in regular contact to discuss developments and any issues emerging.
“You all have an important part to play in the UK response to covid-19 and we know that you will rise to the challenge to support the economy and protect jobs.”
Last week, the government announced a set of measures to support business and protect jobs.
For large firms the Covid Corporate Financing Facility (CCFF) will provide additional help to address Covid-19 related disruption to cash flows.
For smaller businesses the Coronavirus Business Interruption Loan Scheme (CBILS) will provide government-backed finance of up to £5m.
The term funding scheme will also help banks to continue providing credit to businesses and individuals who need additional finance to help them get through this period of disruption.
The letter stated: “We welcome the action already taken by banks, with the support of the regulators, to offer help and flexibility to businesses and consumers.
“This includes initial steps to deliver the CCFF and CBILS, offers for new or increased overdrafts or allowing repayment relief for loan or mortgage repayments.
“We also appreciate your efforts to ensure that any flexibilities extend to customers at this unprecedented time are recorded accurately so as to prevent an adverse impact on a customer’s credit file.”
Article courtesy of Amy Austin