The economic impact of the second Covid-19 lockdown will be less than the first, and there is no need for a new moratorium on debt repayments, according a leading banker.
Speaking to De Standaard, the CEO of KBC bank, Johan Thijs, pointed out that the current lockdown is more narrow than the first, as it affects mainly the retail and entertainments sectors, while many other businesses can carry on trading.
KBC, after a relatively bright third quarter, is holding to its earlier forecast of credit write-offs worth €1.1 billion, while the government is preparing a raft of measures to stimulate the economy. However the signs are, Thijs said, that ministers are reaching back into the toolkit of the first lockdown.
That, he said, is an overreaction. For example, only 29% of those KBC customers who obtained a temporary halt to debt repayments at the beginning of the crisis are still hoping to obtain one second time around. And those for whom the pause has expired are experiencing few problems with making payments.
“In Belgium, 99.55 percent of customers whose pause has lapsed, simply pay off their credit again. Only 60 to 70 customers can’t do that,” he said. The figures suggest it is not necessary to resort again to collective measures, where everyone gets a postponement of repayments.
He suggests instead a response customised to the individual case, using tools like debt restructuring and bridging loans.
“I think we need more tailor-made solutions, rather than resorting to uniform, collective measures,” he said.
He now estimates that very few businesses will go into default if the moratorium on repayments is lifted, judging by the fact that most of those for whom it is already lifted have simply gone back to paying as before.
The question, he concludes, is that the government has perhaps been too lavish with its compensation, and too eager to discover a whole range of ways to frame a debt relief package.