(Bloomberg) -- Rand Merchant Bank urged South African lenders and other finance firms to adopt a more coordinated approach with the government to the economic crisis caused by the coronavirus outbreak.
While South Africa's banks have made a constructive effort to cushion customers from the impact so far, a much broader response is needed, James Formby, the chief executive officer of the Johannesburg-based corporate and investment bank, said in a statement.
“The challenge to the economy will only be overcome if government, regulators, the broader financial-services industry and business work together,” he said. “There are very encouraging signs that this is already happening.”
Read more: South Africa Eases Bank Rules to Free $17 Billion for Loans
RMB is customizing relief packages to clients, Formby said. The unit of FirstRand Ltd. will make available extra funding, short-term covenant waivers and evaluate the capital structures of businesses to help them withstand the longer-term effects of Covid-19. RMB also has prioritized early invoice settlements for its suppliers to prop up smaller businesses.
Formby also said:
- “It's important to help companies look critically at their operations and cash flows now and some months ahead rather than just encouraging them to borrow more, which may create more pressure in the future.”
- All financial-market participants have a responsibility to keep debt and equity markets functioning.
- “How well we respond now will play a big part in attracting investments in the future when this phase has passed.”
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