Covid-19 coronavirus: Thousands of troubled businesses now calling bank for help

Westpac New Zealand chief executive David McLean says tens of thousands of businesses have now got in touch to ask for financial help. Photo / file

In just over a week the number of businesses calling one of the country's largest banks has risen from a dozen to thousands now asking for help with their financial situation.

Westpac New Zealand chief executive David McLean said it was moving staff into different positions and recalling retired bankers to help it deal with the sudden increase in those contacting it.

"We are dealing with each one on a case-by-case basis," he said.

Most of the businesses seeking help were in the tourism, retail and hospitality sectors.

"Those are probably the worst affected."

Businesses in those sectors had literally seen their incomes turned off as a result of the restrictions around coronavirus.

McLean said it was turning to its more experienced bankers to help those businesses with a range of solutions which included interest and payment holidays.

So far the bank had been able to come up with a way to help those who needed it.

But McLean predicted there would be some it would not be able to help.

"To be realistic there will be some."

He said there were some businesses that had done okay in the boom time but were marginal in a slower economic period.

But he said banks were being careful not to pre-judge those who would not make it.

"We are erring on the side of caution"

He repeated an earlier call urging any business owners worried about their situation to get in touch with their bank.

"Don't be afraid. It is in a bank's best interests to help you through it," he said.

If there was one key aspect businesses should look at it was forward cashflows and what expenses might be able to be dialled back.

"Talk to your suppliers and see if they can help out a bit. Look at your insurance policies."

McLean said the current situation felt very different to the global financial crisis and the 1987 sharemarket crash.

"This feels worse in a way. Then [in the GFC] the whole financial system seized up and stopped but here the financial system has kept going."

Now the world was facing a rapid deterioration in the global economy with countries closing their borders.

"87 also exposed a lot of non-viable businesses but normal life went on."

He said the 1918 Spanish flu was probably the closest to the coronavirus pandemic.

McLean said banks had contingency plans in place to ensure the financial system continued to operate but in the rare situation that a branch had to shut he urged people to have contingency plans in place to make sure they had internet banking set up.

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