Banks and other lenders have today confirmed that a further three-month extension to the current payment break will be made available to customers that continue to be directly impacted by the fallout from Covid-19.

Banking & Payments Federation Ireland said its members, which include AIB, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank Ireland, have confirmed the extension.

It said that in light of the prolonged and deepening crisis, the extension will allow impacted personal and business customers a payment break of up to six months in total. 

BPFI's chief executive Brian Hayes said the confirmation of the extension is an important signal to those most affected by the fallout from Covid-19, be they mortgage holders, those with personal loans or SMEs.

Mr Hayes said that BPFI has had excellent engagements with the Central Bank on behalf it its members.

"We appreciate the pragmatic approach being taken across the board to the challenges facing those impacted by Covid-19", he stated. 

Over 65,000 mortgage payment breaks and over 22,000 SME payment breaks have been granted since the industry-wide payment breaks were announced on March 18. 

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Mr Hayes said that the existing public health measures put in place by Government, aimed at mitigating the impact of Covid-19, have been extended since the original BPFI announcement of payment breaks up to three months. 

"These measures may need to remain in operation for some time or may only be lifted gradually with an unknown impact on the economy going forward," he said. 

"BPFI members strongly appreciate the severity of the impact on families, individuals and businesses and it is for this reason, that we believe an extension of the existing payment break beyond three months may be required by many customers," he added.

He said that banks and lenders will contact customers who have availed of payment breaks over the coming weeks and months about the possibility of extending this break. 

Mr Hayes said that customers do not need to contact their lender. 

The Central Bank said said it noted the decision by Banking and Payments Federation Ireland members to extend the offer of breaks for another three months.

The regulator added that if a borrower avails of a six month payment break, it will not be identified on their credit report recorded on the Central Bank Credit Register.

It also said it is working with lenders to ensure the extensions operate in borrowers' best interests.

The bank said it expects that at the end of the agreed payment break, borrowers who can return to full repayments will be given the option to either repay the loan within the remaining term or extend the term of the loan.

"The impact of both options on the overall cost of credit and monthly repayments should be fully explained to the borrower," it said.

It also said that it expects that lenders will ensure that borrowers who want to exit a payment break at any stage are offered appropriate sustainable solutions, including forbearance, and that they will engage with customers. 

"The Central Bank also expects lenders to prudently assess the level of distress in their loan books and for this to be reflected in provisioning levels, notwithstanding that provisions may not yet be taken at an individual borrower level," it said.

BPFI members who are extending the payments break include AIB, Bank of Ireland, KBC Bank Ireland, Permanent TSB, Ulster Bank, Finance Ireland, Investec Private Finance Ireland, Dilosk/ICS Mortgages, Lapithus, Link Group, Mars Capital, Pepper and Start.

Francesca McDonagh, chief executive of Bank of Ireland confirmed the lender would be participating in the extension.

"In recent weeks we put in place a range of supports and we have been keeping these under constant review to ensure we’re doing everything possible and practical for our customers at this time," she said.

"We have been offering three month payment breaks on mortgages, personal and business loans to customers impacted by the pandemic."

"We are now giving customers the option to extend their payment break by a further three months. Customers don’t need to take any action as we will be contacting everyone who’s on an existing payment break to set out all the options."

AIB CEO Colin Hunt said yesterday that its applications for mortgage assistance had stabilised.

Earlier, Dr Ali Ugur, chief economist with Banking and Payments Federation Ireland, said Irish SMEs will also need a range of other supports if they are to survive and recover over the coming months.  

Banking and Payments Federation Ireland has today published an economic recovery plan for small and medium-sized enterprises, and said that a new state guaranteed Covid-19 business support fund is needed. 

BPFI said that a new state guaranteed scheme would enable government guarantees of emergency loans to Irish SMEs, temporarily distressed as a result of Covid-19, but who are otherwise creditworthy borrowers. 

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Dr Ugur said the estimated scale of the proposed new guarantee scheme could range from €6 billion - €8 billion, depending on the number of Irish SMEs that would require it in the economically challenging months ahead. 

The economist said he believes this state guarantee business fund is "crucial" to help SMEs and provide them with liquidity during this crisis until some sort of normality is returned to the economy. 

He said banks will be used as a channel to lend the money through the state guarantee fund.  

"It is widely acknowledged that this is one of the most significant tools used across Europe to provide the amount of liquidity necessary for SMEs. The Central Bank acknowledged that banks will not be able to do it on their own."

He said banks have experience dealing with distressed customers and have gained significant experience. 

He said they have worked with SMEs who have gone through a crisis period before and have survived.