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in an attempt to avoid what some fear is a looming financial clip as you've heard the banking industry is pondering various ways to create and manage a post-debt relief plan for people who may struggle with repayments when the coronavirus-related debt relief measures wind down to tell us how south african banks will navigate through this difficult time we're joined now by fnb ceo jacques celias thanks so much jack for your time this evening so not to scoff at any of the support measures that you know have been put in place to support customers that are in financial distress i've got to ask is a realistic view being taken on when cash flows will have resumed sufficiently enough for clients to start servicing their debt again thank you for for the opportunity and obviously for the listeners out see there um it's a it's an interesting journey for us has been the last few uh few months you know as a rule we quite used to restructuring people's debt as an example in the farming community when there is a drought you know so we have interventions to restructure people's debt uh when customers lose a client or when a factory burns down so we're quite used to uh instruments that can handle these uh these situations the tough thing is clearly there's a massive wave of it so the volumes are just incredibly uh big at the moment and obviously across the industry and it's um it's it's it's got this added complexity of understanding when um the sort of national decisions around lockdowning and uh and opening up um uh you know becomes a reality as you know very few people sort of saw the the further ban on alcohol cells happen so you might have a strategy for an industry thinking that this activity and then the industries don't behave or react as one would have planned but the reality is that that we as an industry become very sophisticated over time to to monitor activity and to be responsive to it so uh you know at an individual client level we are um crucially uh reviewing and and and planning across the specific industries in the local markets in which they operate to to be responsive to any form of activity that happens to uh to come back into the system to support where we can to keep to keep the activities going i mean the most important thing for us as as banks across the sector is to keep businesses open yeah and to keep people in their homes um it is in everyone's interest to get that right so lots of sophisticated models going in here lots of support from the regulators lots of industry alignment uh lots of additional support uh from donors coming into the system um so it's a it's a it's a very alive um and responsive approach i mean we've we have literally as an essential service i mean our creator teams and our financial resource management teams have not they've had hardly asleep over the last few months they're trying to come up with innovative approaches so much so jacques that you know you're looking to offer extended uh cash flow relief measures to select customers that have been hit so what kind of debt relief are you uh putting on the table for customers from here on out because i guess you know it's it's critical where you're having to manage you know default on the one side but also uh what those defaults potentially spell and that depreciated assets sitting on your hands whether you're looking at houses cars or you know any type of machinery or business equipment as well absolutely so i mean you know i think we've all come to realize that we were naive to think that this lockdown would end in the three weeks that we thought we would have off and then everyone switched on the lights again and we go back to business the difference with this cycle clearly is that there was a phase that we could we could see the solutions coming through normal just payment uh breaks and a little relief here and there and maybe extending the payment terms a bit and giving people short-term uh relief that certainly could work in some of the industries and some of those certainly benefited from that but we are now going into the phase where we need to activate alternative mechanisms longer-term solutions um you know you can't solve some of these problems with just another loan as you all know this they they they only serve a purpose the short-term activity that we started off with so now we are into lots of debates around equity and when you get into equity um activities i mean clearly the biggest thing for us is how do we keep people in their homes and there there's some customers with big equity in their own so that we can structure into that um and then their customers are more newer to the market we potentially we will have to rely on either uh if you're a younger parent maybe we can innovate into a parent's equity in their parents properties or we can leverage a bank a balance sheet in some of the business activities they're doing so we're gonna have to be innovative around how we create instruments and vehicles for that it's not new it's not new to us but it's just a lot of work to make sure we get it right those four uh or that for those already in it uh jacques when it comes to new lines of credit extension what kind of lending activity are you seeing post lockdown where you know one imagines it's got to become or be becoming increasingly tougher to continue to extend any credit responsibly as you uh try and avoid blanket debt write-offs down the line absolutely now what's nice about i mean if you think about f b we've been around for 180 years now 182 years actually the cycles come and go crises happen and uh and what you know what you need to make sure you do well is is is keep proper activity uh going through through a crisis and then be ready for the supporting it when the markets open up again i mean what we as an as a country can't afford is that we have um you know zombie banks when the crisis finishes where the balance sheets are broken where the banks are broken and potentially where the taxpayers have to bail out the banks as well you know so so it's our industry is focused a lot on making sure that we keep our banks intact and that any opportunities for credit extension as people see opportunities to expand as the markets open up again that we can support that growth phase again you know growth post this is going to be critical for us to stimulate not to then we run out of resources for that on that note before i let you go i was chatting to bongiwei konnene who's the md of basa of course a short while ago and talking about the loan guarantee scheme in particular jacques over and above what the banking players themselves are doing in terms of support mechanisms with only a fraction of those funds having been dispersed on the back of onerous criteria that either don't see applicants qualify or bother applying at all is it really achieving what it's intended to yeah so i mean we'll create discussions with probably every customer that does it created agreement with us over the last few months some of them we can solve ourselves with our own balance sheets and some of it we need to partner and this as an instrument clearly is a partnering with with with the reserve bank um to see if we can help uh treasury to to facilitate that uh as a conduit get money out of clients but there's some real strict conditions for that not only on our clients but also also banks to deliver to that um we see that it's almost like the first phase of a number of iterations to this process yeah most things happen the first time you launch it you think it works and works a bit differently and you tweak it and build it the point really is that the relief discussions are going to be with us for a long time and it's nice to know that there's capacity in the treasury to support that and we're going to work with the industry and with our clients in the industry and treasury and reserve bank to make sure that we smooth these little challenges out and we get relief to where it's needed as much as we possibly can there's a nice pipeline of people have applied and we've got all of this detail and we're working with those and obviously we'll do as much as we can jacques let's leave it there and good luck as you navigate these uncharted waters jacques elias is ceo of fnb