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Australian banks extend loan holiday for struggling borrowers
[SYDNEY] Australian banks will extend the loan repayment deferral period for borrowers struggling to service their debts due to the coronavirus to 10 months from six, the peak banking body said on Wednesday.
The four-month extension from a previous end-date of September reflects concerns that economic repercussions from the pandemic will continue when current government income support expires.
The Australian Banking Association (ABA) added that people struggling to repay mortgage or business loans would also be given options to restructure existing loans. The new extension follows the ABA's announcement in March of a six-month deferral of repayments.
"This next phase of bank support will avoid a 'cliff' for customers in September and give them the breathing space they need to work with their bank and get back on their feet financially," said ABA chief executive Anna Bligh.
Three of the country's top four lenders - Commonwealth Bank of Australia (CBA), Westpac Banking and Australia and New Zealand Banking Group - immediately announced various options for customers to restructure their loan repayment plans or defer payments.
"While many customers are doing better than we expected, we know that some customers will require further support and we will contact them over the coming months to discuss the options that might be available to them," CBA chief executive officer Matt Comyn said.
National Australia Bank did not immediately announce changes.
In a separate statement, the prudential regulator said it would extend the period during which banks are allowed to disregard the repayment deferral period as a period of arrears in their capital adequacy and regulatory reporting processes.