In order to combat with COVID-19, BoI acts in the following areas:
- Operation in the new reality, including remote activity and business continuity;
- Measures to support liquidity in financial markets and economic stimulus;
- Risk management;
- Consumer protection and other support for households, businesses and corporations;
- Additional regulatory relief.
Some directives and temporary relief guidance mentioned in this slide.
In order to combat with COVID-19, BoI acts in the liquidity provider
- 7.5.2020 - From the beginning of the crisis until the end of April, the banks extended the payment of loans to 450,000 customers in all segments of activity, totalling NIS 5.2 billion, unprecedented. In order to continue helping the bank's clients to cope with the crisis, while managing sound and responsible risks, and to create certainty for the general public about payment options, a uniform outline for loan repayments has been formulated, which has been adopted by all banks as of 7 May. The type of assistance required for those affected by the crisis is divided into two types: households and businesses whose crisis evening met their loan repayments and that the damage to their income is expected to be short-term can succeed through the crisis through credit assistance or repayment of loan payments. As long as the impact on income is long-term, or the business is at high risk and there is doubt about its ability to meet the loan repayment for a long time, there is no room for increased credit, and the aid can only be provided in the form of state aid or credit provided with a high government guarantee. This is especially true of high-risk industries. The outline refers to the repayment of loan payments in three sectors of activity (mortgages, consumer credit and business credit), and allows households and small business owners to defer loan payments as follows:
- Mortgage - repayment will be made for a period of 6 months, with no limit on the amount of the loan balance.
- Consumer loans - The repayment will be made for a period of 3 months for loans with a balance of up to NIS 100,000. In addition, there is an option (at the discretion of the bank) for a further 3-month deferral of these loans.
- Small Business Loans - Repayment will be made without limitation on the amount of the loan balance, for a period of up to 6 months, in accordance with the Bank's discretion.
- Fees - No fees will be charged for deferred loan payments.
- Interest Rate - Deferred payments will carry interest that does not exceed the interest rate in the loan contract. It is important to emphasize that postponing a loan payment is like taking out a new loan at the amount of the deferred amount.
- How to distribute loan payments - Mortgages will be spread over the entire balance of the loan period, and consumer credit and the payment business will generally be deferred until the end of the loan period.
- Period for applying for deferral of payments - You can apply to the Bank for deferral of loan payments, according to this outline, until 31.7.2020.
- 21.04.2020 - Facilitating Housing Loans Given the Corona Crisis - aimed to reduce the effects of the corona crisis on mortgage and all-purpose creditors (in a mortgagor). These include:
- Relief of Limitations on Housing Loans for Unpaid Vacation Workers - Due to the Corona crisis, many workers were expelled to the Unpaid Vacation, and their income was reduced accordingly. Threshold of PTI/DSR (which stands at 50% of both borrowers' income) may be barred for them from obtaining a mortgage, and in some cases blocked from meeting existing purchase obligations. The Temporary Order provides that, if a number of conditions are met, the banks may provide mortgages according to the borrower income prior to their Unpaid Vacation.
- Reduction of the additional 1% capital requirement for housing loans that are applied during the Corona crisis (until 30.09.2020 unless will extended by the BoI).
- 21.04.2020 - Facilitating Housing Loans Given the Corona Crisis - aimed to reduce the effects of the corona crisis on mortgage and all-purpose creditors (in a mortgagor). These include:
- Relief of Limitations on Housing Loans for Unpaid Vacation Workers - Due to the Corona crisis, many workers were expelled to the Unpaid Vacation, and their income was reduced accordingly. Threshold of PTI/DSR (which stands at 50% of both borrowers' income) may be barred for them from obtaining a mortgage, and in some cases blocked from meeting existing purchase obligations. The Temporary Order provides that, if a number of conditions are met, the banks may provide mortgages according to the borrower income prior to their Unpaid Vacation.
- Reduction of the additional 1% capital requirement for housing loans that are applied during the Corona crisis (until 30.09.2020 unless will extended by the BoI).
- 21.04.2020 - The Banking Supervision Department (BSD) published a guidance regarding the implementation of requirements set in Reporting Directives, on accounting treatment of borrowers who temporarily encounter payment difficulties due to the COVID-19 crisis. The BSD encourage banks and credit card companies to act in a prudent and proactive manner to mitigate temporary adverse impacts on households and businesses which are affected by COVID-19, in line with the long term interest of the banks, their borrowers and the overall economy. In addition, the BSD provide guidance regarding troubled debt classification, and clarifies that short term loan modifications (for example, 6 months), such as payment deferrals, late fee waivers, or extensions of repayment terms, do not automatically result in a troubled debt restructuring classification of loan modifications. The statement is similar to recently published guidance by regulatory agencies in the US and the world.
- 21.4.2020 - Disclosure Guidance and Highlights for public reports for the first quarter of 2020.
- 19.4.2020 - Clarifications regarding the Supervisor’s guidelines related to suspending account restrictions in respect of checks without cover, in order to avoid the negative impact on customers whose income has decreased markedly and who are liable to become restricted customers. However, it is important to note that these guidelines do not cancel the restrictions (it is only a suspension) and that checks that currently are not counted toward the imposition of a restriction are liable to lead to a restriction at the end of the suspension period.
- 2.4.2020 - Leniencies in adding customers to remote execution of transactions and in issuing debit cards to customers.
- 29.3.2020 - Reducing capital requirements for banks and directing them to examine the distribution of dividends to increase credit supply to the economy - Since the outbreak of the crisis, the demand for credit has risen sharply, and at the same time, the level of risk in providing credit has increased, given the deterioration in the economic situation of businesses and households. In order to ensure the ability of banks to continue to offer credit, the BSD announce the reduction of regulatory capital requirements by one percentage point, so that the minimum requirement will chance as following:
Minimum capital requirement |
31.12.2019 (prior reduction)* |
From 29.03.2020 till 30.09.2020** |
From 30.09.2020 till 30.09.2022** |
CET 1 |
9% or 10% (large banks) |
8% or 9% (large banks) |
Minimum requirement will stand at the lower between (1) actual capital ratio at 30.09.2020 or (2) original capital requirements. |
Total capital |
12.5% or 13.5% (large banks) |
11.5% or 12.5% (large banks) |
- 6.04.2020 - Reduce interest rate by 0.15 percentage points to 0.1% and other monetary measures–
- The Bank of Israel offers banks a plan to increase the supply of credit for small and small businesses - The program will amount to NIS 5 billion. The Bank of Israel will provide the banking system with fixed-rate 3-year loans at a rate of 0.1%, with the aim of increasing the bank's credit supply to small and small businesses, and helping them to cope with the Corona crisis and return to full activity when possible.
- The Bank of Israel expands the repo tool to include corporate bonds as collateral - the Bank of Israel will, in addition to government bonds, also receive corporate bonds rated AA or higher, as part of the repo transactions with the financial institutions. The purpose of expanding the range of collateral is to allow flexibility for authorized entities to use this tool and to ensure the Bank of Israel's ability to support the shekel liquidity in a financial system.
- 15.03.2020 - 23.03.2020 - The Bank of Israel purchases NIS 50 billion in government bonds to ease credit conditions in the economy and support economic activity. Concurrent with the bond purchase program, the Bank of Israel will continue to allow financial entities to execute repo transactions with it using government bonds as collateral as announced on March 15, 2020, as well as the NIS dollar exchange rate tender program announced by the Bank of Israel on March 18, 2020.
* On top of this will be added additional 1% on mortgage loans/total RWA.
** On top of this will be added additional 1% on mortgage loans/total RWA except mortgages provided in the period from 29.03.2020 till 30.09.2020.
- 14.7.2020 - The Banking Supervision Department announces the expansion of the comprehensive framework for deferring loan payments In May 2020, the Banking Supervision Department announced a comprehensive framework that was adopted by the banking system for deferring loan repayments, as assistance to bank customers in dealing with the ramifications of the coronavirus crisis. In March–June 2020, the banks deferred loan repayments for approximately 553,000 customers in all activity segments, at a total value of approximately NIS 7 billion. With the goal of continuing to assist customers in dealing with the case flow difficulties due to the ramifications of the coronavirus crisis, while managing risks in an informed and responsible manner, the Banking Supervision Department announced an extension and expansion of the previous framework for deferring loan repayments, as follows:
- Regarding mortgages, consumer credit and business credit: The period for submitting a request for a deferral of loan repayments will be extended to October 30, 2020.
- Mortgages: Customers who have already received a deferral of mortgage repayments will be able to defer the payments until the end of 2020, even if the deferral exceeds 6 months. Customers who have not yet deferred mortgage repayments, and ask to do so, will be able to defer the payments for 6 months.
- Consumer loans up to NIS 100,000: Customers will be able to defer such loans for up to 6 months (at the customers’ choice) without the bank’s judgment, as opposed to the previous framework in which the deferral was for 3 months.
- We emphasize that the framework that was formulated presents the minimum terms for deferring the loans, and each bank may expand it for the benefit of its customers and at their request.
- The Banking Supervision Department will continue to follow closely the developments and the dynamic ramifications of the crisis, and will examine additional ways to assist households and businesses.
- 24.6.2020 – The Supervisor of Banks has sent a letter to the banking system regarding “Providing a response for customers enduring economic difficulties against the background of the coronavirus crisis” The banking system has returned to full operation in view of the COVID-19 pandemic, as most restrictions have been cancelled and the economy has begun returning to regular economic activity. However, in view of the high rate of unemployment and the negative impact to economic activity, many households and businesses continue to suffer from the ramifications of the corona crisis. In view of this, the Supervisor of Banks today sent a letter to the banking system in which he clarifies how the banking corporations are to work in order to help customers that are encountering difficulties due to the crisis. The Supervisor’s letter emphasizes that in accordance with existing Supervisory Directives, if a customer experiences financial difficulties and has trouble meeting his obligations toward the banking corporation, the banking corporation must try to exhaust all available avenues to collect all components of the debt before initiating legal proceedings, while maintaining fairness and transparency throughout the debt collection process. This is even more the case in the current situation, and as such, the banking corporations are being asked to continue operating in this manner with even greater intensity than usual, with the aim of identifying difficulties and helping their customers get through this challenging period as quickly as possible, so that they can help prevent the escalation of debts and future deterioration of their customers’ situations.