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Fitch Ratings warns non-bank lenders on impacts of payment holidays on liquidity

Reasons:

  • Clients of non-bank consumer lenders are typically more prone than banks' clients to economic shocks because of their impaired credit histories/irregular income streams and are therefore more likely to be eligible for payment holidays;
  • Non-bank lenders typically do not have access to retail deposits or central bank facilities but depend on wholesale funding resources - which are sensitive to investor confidence and mostly closed to non-bank lenders amid the pandemic; and 
  • The sector has been largely excluded from governments' emergency funding schemes.

Link to related article: https://www.fitchratings.com/research/non-bank-financial-institutions/payment-holidays-to-weaken-european-non-bank-lenders-liquidity-21-04-2020

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