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CBM names sectors to require support from CBR, government and banks

17.03.2020

Credit Bank of Moscow (CBM) notes that the measures announced by the Bank of Russia on 17 March to ensure stability and economic development are an opportune response and provide much needed support to real businesses in the challenging global epidemiologic situation. If the coronavirus pandemic does not subside, further steps would be required to support Russian business.

"The first ones to suffer from the coronavirus pandemic are transportation and tourism, so the loan-related easing already granted by the Government and CBR to these segments send the right signal to banks encouraging them not to aggravate the situation for customers from the affected sectors, – notes Alexander Kaznacheev, Deputy Chairman of Management Board, – These measures have already allowed banks not to create any extra provisions or raise the rates for these sectors, which would be inevitable but for CBR's support".

If not dealt with in the nearest months, the coronavirus challenge will inevitably hit more sectors: catering and restaurants, cinemas, entertainment, retail trade (non-food – primarily clothes and appliances), shopping malls. Furthermore, consumer demand may erode in some import-reliant sectors due to the rising dollar exchange rate. Some sectors may face a physical limitation of deliveries of imported spare parts and materials caused by quarantines in China and Europe.

"If the Government and CBR continue to identify problems in certain sectors and provide various kinds of support, banks will be integrated in this process and able to be benevolent towards affected borrowers, restructure and reschedule their loans," explains Alexander Kaznacheev.