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UPDATE 1-S.Africa's big banks: Up to 20% of borrowers may not qualify for coronavirus relief

* Virus relief measures definitely cover some 80% of borrowers

* Borrowers already under strain don’t automatically qualify

* Banks say more could be done with money from the government

* Central bank publishes proposed measures to help lenders

* (Adds SARB proposals)

JOHANNESBURG, March 30 (Reuters) - South Africa’s biggest retail banks said around 15-20% of their borrowers may not qualify for coronavirus relief measures announced by the lenders last week, though more could be included if the government provided fiscal support.

Banks contacted by Reuters on Monday said customers who would not qualify were those whose loans were already impaired prior to the outbreak of the respiratory pandemic. Others who had fallen behind on payments, for instance, might be able to access support but this was not guaranteed.

The sector announced industry-wide parameters for support last week, saying it would, on a case-by-case basis, help customers who were in good standing and up to date on their payments prior to the virus outbreak, with options including payment deferral, debt restructuring or bridging loans.

Lenders subsequently faced some criticism for not doing more to help customers in trouble after the introduction of a 21-day lockdown late last Thursday brought the bulk of Africa’s most industrialised economy to a shuddering halt.

Jacques Celliers, CEO of FNB, a division of lender FirstRand and the largest retail bank in South Africa, said around 70-80% of its lending book would definitely qualify under the current relief measures.

“We’re going to have to spend more time with our authorities to see what capacity the (government coffers) could have to help us support more customers,” he told Reuters, adding the current measures covered what the bank could afford by itself.

Nedbank said around 80% of its retail borrowers would definitely qualify. For Standard Bank, that figure was slightly higher, with around 5% of its book - those whose loans are already classed as impaired - definitely not qualifying, Funeka Montjane, CEO of personal and business banking South Africa, said.

Absa said 85% would qualify with no exceptions, while 8% did not qualify whatsoever.

Celliers and Montjane said this would already prove costly for the lenders.

The borrowers affected by the decision are those businesses and consumers already in some degree of trouble, and most likely to be pushed over the edge by the impact of the coronavirus.

Many across South Africa were already facing financial difficulty after the economy slid into recession in the final quarter of 2019 following years of lacklustre growth. Impairments jumped across the big four lenders last year.

In other countries facing lockdown, like Italy or the United Kingdom, customers’ mortgages have been guaranteed by the government or large cash injections have been announced. But South Africa’s cash-strapped government does not have the resources to prop up the economy in this way.

Cas Coovadia, managing director of the Banking Association of South Africa, said last week the sector should not go further without action from the government, because it could not jeopardise its own credibility.

Meanwhile, the South African Reserve Bank (SARB) over the weekend published proposals for a number of other temporary measures that it could take to ease the pressure on lenders. These would include relaxing capital and liquidity requirements, and rules on when banks have to classify a loan as distressed.

Central banks worldwide are looking at similar measures to ensure lenders can extend much-needed credit and help keep economies going despite the abrupt and unprecedented shock of nationwide lockdowns and slowing business as people reorganise their lives around the pandemic.

A relaxation of liquidity requirements in South Africa will come into effect on April 1 and last until the SARB’s Prudential Authority says financial markets have normalised, one of the documents said. (Reporting by Emma Rumney Editing by Mark Heinrich)

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