Are foreign banks in the UAE helping customers affected by Covid-19?
The Central Bank has asked all lenders in the Emirates to grant financial relief to their clients, but the measures vary
As the coronavirus outbreak continues to ravage economies across the globe, major banks in the UAE have rolled out measures to provide financial relief to customers.
The measures – which include payment holidays for between one to three months, reductions in cash advance charges and a lower down payment for first-time home buyers – are in line with the UAE Central Bank’s Dh100 billion economic stimulus package unveiled on March 14.
But what about foreign banks in the UAE, including Citi, HSBC and Standard Chartered? They too have taken action to help customers cope with the financial fallout from the efforts to contain Covid-19.
While Dubai banks – including Emirates NBD, Mashreq, Commercial Bank of Dubai, Dubai Islamic Bank and Emirates Islamic – and Abu Dhabi banks – including First Abu Dhabi Bank, Abu Dhabi Commercial Bank and Abu Dhabi Islamic Bank – have co-ordinated and released common financial initiatives in each emirate, foreign banks have released initiatives individually. The measures, as well as the criteria for customers to qualify, vary.
Worldwide, there are over 723,000 confirmed cases of Covid-19 with more than 34,000 deaths, according to Johns Hopkins as of Monday. More than 152,000 have recovered. In the UAE, there are 570 cases with three deaths and 58 recoveries.
Containment measures in the UAE, such as stay-at-home directives and business closures, could cause a decline in revenue for companies, and a cut in income or job losses for individuals.
Here we break down what Citi, HSBC and Standard Chartered are doing to help those affected by Covid-19 in the Emirates, either directly or indirectly.
Earlier this month, Citi made fund transfers free through the mobile app until April 30. It also said it would donate 0.5 per cent of all debit card spends in the month of March to help with the efforts to combat Covid-19.
The bank introduced additional measures last week and is in the process of rolling out others, Dinesh Sharma, head of Citi's Middle East consumer bank division, told The National. Citi has around 300,000 customers in the UAE.
If customers with existing loans are facing reduced cash flow, a temporary loss of payment or redundancy, they can apply for a 75 per cent reduction in their monthly instalments with significantly lower interest. “If a customer was paying Dh1,000 a month, that can go down to Dh250,” Mr Sharma says. Previously, the rewrite programme allowed customers to apply for a reduction of up to 50 per cent.
Customers facing difficulties for a short period of time have the option to request a payment holiday through the bank’s “skip a payment” programme, Mr Sharma says. Previously clients could apply for a payment holiday of up to two months. Now, they can defer the principle payments for three months and then ask to extend it by another three months.
“In total, a customer can get a temporary relief of six months or he/she can get permanent relief on a restructure in case the difficult situation is permanent,” Mr Sharma says. “Close to 200 customers have already approached us,” he added.
Citi is looking into reducing credit card cash advance charges by 50 per cent, as local banks have done. However, Mr Sharma says this feature is used by less than 10 per cent of its customers in the UAE market.
“Our main focus is to make sure the features we’re providing are making a real difference to customers, so we also look at the usage rates,” he said.
Similar to local banks, Citi has removed the Dh2 fee to use other banks' ATMS for three months from April 1 until June 30.
The bank has approved waiving the fee on its “Citi PayAll” programme, which allows customers to pay for rent, property maintenance, education, travel plans and special events in monthly instalments using their credit card. The fee, as per the December 2019 schedule of fees and charges, is up to 4 per cent of the transaction amount plus VAT.
The rewrite and payment holiday programmes are applied on a case-by-case basis, while the free transfers, temporary waiver of ATM charges and removal of Citi PayAll fee are for all customers.
When asked what constitutes being “affected” by Covid-19, Mr Sharma said: “It could be anything. It could be that somebody in the family has contracted the virus or is in quarantine. It could be customers who have been asked to go on leave without payment … No one is excluded.”
On a global level, the Citi Foundation said on March 19 it will provide $15 million (Dh55m) to support relief activities related to Covid-19.
HSBC has released “Covid-19 guidance and FAQs” on its UAE website. It outlines a package of measures, effective immediately, to help its customers and “contribute to the initiatives announced by the Central Bank of the UAE to support the country’s economy”.
“We are staying very close to all of our customers – our priority is to work with them and help them navigate any challenges they currently face,” Daniel Robinson, head of retail banking and wealth management at HSBC UAE, told The National. The bank's relief measures include:
• Customers who have been placed on unpaid leave by their employers can apply for a one-month repayment holiday without interest and fees for their personal loans, mortgages and car loans.
• Charges will be refunded on cash withdrawals and balance enquiries made at all non-HSBC ATMs across the UAE and GCC (in place since March 15).
• School fees paid by credit card qualify for an instalment plan of up to six months starting from 0 per cent interest with processing fees waived.
• All first-time home buyers can benefit from a 5 per cent increase in the loan-to-value ratio for mortgages.
These are similar to measures introduced by Dubai and Abu Dhabi banks. However, local lenders are offering a repayment holiday of up to three months for those placed on unpaid leave and all customers are eligible for one-month payment holidays.
HSBC customers can also apply for temporary increases in credit card limits, subject to eligibility. The bank has increased daily ATM cash withdrawal and purchase limits since March 19.
The bank is encouraging clients to contact their relationship manager for help and make use of the automated phone banking service, rather than visiting a branch.
HSBC said last week it is providing $25m in charitable donations to support the international medical response, protect vulnerable people and ensure food security around the world.
Standard Chartered in the UAE has launched a series of measures “to help ease the financial burden" on their clients, effective from April 1 to June 30, according to a post on its website.
• All clients affected by Covid-19 can ask the bank for a three-month repayment holiday on their existing personal loans, car loans and mortgages with zero interest and fees.
• All clients can choose to pay only the interest component of their existing loan for a period of three months.
• For credit card transactions over Dh1,000 on hospital fees, school fees, utility bills and grocery payments, purchases can be converted into equal monthly instalments at 0 per cent interest and no processing fees.
• The foreign currency transaction fees on cancelled travel bookings will be refunded.
• Cash advance fees on credit cards will be cut in half.
Only UAE residents are eligible for the relief measures and it is limited to clients who are “up-to-date with their payment obligations”.
Those who are financially affected by Covid-19 can avail the measures by sending an email to email@example.com. They must provide certain documents to claim temporary relief from payments, such as: a letter from the employer stating the impact of Covid-19 as the reason for unpaid leave or termination; a note from the Ministry of Health confirming you were infected by Covid-19; evidence that Covid-19 has directly or indirectly affected the ability to pay due to travel restrictions or quarantine; or bank statements reflecting the revenue loss of more than 20 per cent, month on month, if self-employed.
On Monday, Standard Chartered said it would commit $1bn of financing for companies worldwide that provide goods and services to help the fight against Covid-19, or those who plan to switch into making products that are in high demand to address the crisis. The bank will provide, at preferential rates, the money in the form of loans, import/export finance or the working capital facilities companies use for day-to-day business operations.
Updated: March 30, 2020 07:02 PM