In mid-April, Greenwich Associates and S&P Global Market Intelligence launched a study to track the banking industry’s response to the COVID-19 crisis. A total of 36 wholesale banking divisions from 25 U.S. commercial banks participated in the first joint COVID-19 Response Study. Here are our primary findings.
- Five Key Insights
- 1. Providing Relief to Companies—U.S. banks are moving en masse to provide companies hit by the COVID-19 crisis with payment deferrals, fee waivers and extended repayment terms on loans, lines of credit and cash management services.
- 2. Moving Reactively vs. Proactively —Although most banks are providing this relief on a reactive basis at the request of clients, a sizable number of community banks are moving proactively to waive fees and make other accommodations for clients on loans.
- 3. Addressing PPP Bottlenecks—While midsize and larger banks call in additional internal resources to alleviate bottlenecks on Paycheck Protection Program (PPP) loans, community banks seem to be reaching the limits of their more constrained resources as they gain many “spillover clients” larger banks can’t quickly handle.
- 4. Watching for a Major Uptick in Credit Utilization—Some banks are reporting higher-than-average levels of utilization on credit lines—primarily among the biggest companies with the biggest credit facilities. However, banks in the study say companies are not yet moving in large numbers to draw down credit lines for significant funds.
- 5. Introducing Rates Floors—The vast majority of banks are taking steps to preserve loan portfolio quality and revenues during the crisis. A majority of larger banks and about half of midsize banks are elevating lending standards, and most banks in these segments are introducing rate floors.
Greenwich Associates and S&P Global Market Intelligence will continue conducting this study and providing results and insights back to study participants for the duration of the COVID-19 crisis.
Greenwich Associates consultants Don Raftery, Chris McDonnell, Dana Schwaeber, Ronald Balmer, Jacqueline Vose, and associate Daniel Morrissey advise the Firm’s banking clients. Through their work on the S&P Global Market Intelligence’s Performance Optimization Program, Ben Logan and Erik Wnuck help banks drive increased risk adjusted revenue through a combination of market-data-based deliverables and best practices.
Learn more about our Performance Optimization Program todayRequest Demo
Extraordinary Actions for Unprecedented Times: Bank Responses to COVID-19 Crisis in Lending, Deposits and Cash Management