Analytics, Banks, Covid-19, Estonia, Financial Services

Of the grace periods awarded, 78 percent concern home loans and 22 percent consumer credit  and leases. In addition to housing loans, leases and consumer credit, grace periods can be sought also in study loan and credit card repayments. However, grace periods with said kinds of credit rather are sought in singular cases, according to SEB. 

Grace periods were sought by clients mostly during the emergency situation, and the reasons for doing it rather were to do with uncertainties related to the coronavirus, the restrictions imposed as part of the emergency situation, and reorganization in the economy. 

"We can see that the summer generally had a positive effect on clients; to day, confidence has been gradually returning. Most of the grace periods agreed upon at our bank ended at the agreed time and clients have not considered it necessary to extend them," Ainar Leppanen, board member of the bank, said in a press release. 

There was also a notable proportion of clients who wanted to return to the repayment of the principal of their loan earlier, as their financial situation had returned to normal. 

At the moment, some 1,600 private and corporate customers of the Estonian operation of SEB are on a grace period. The share of clients defaulting on their payments has not increased during the coronavirus crisis and has even declined compared with the same time last year. 

According to Leppanen, rapid reaction by the government and banks, but also the financial awareness of individuals and businesses and their diligent behavior proved essential for the recovery of their payment capability and overcoming the initial economic shock.  

At the same time, it is clear that the situation is still only returning to normal and in several sectors -- accommodation, hotels, catering, tourism, and the fields of activity directly connected with them -- uncertainty rather has increased, which means there is no reason yet to be too optimistic. 

"While the health crisis and the decline in turnovers and profits in several sectors related to it will reverse when a solution is finally found to the virus, we have to cope also in the meantime. One of the keywords in coping with crises always is cooperation -- between people, between sectors, but also between the public and private sectors. We hope that it will continue and improve further still in the future," Leppanen said. 

In accordance with the common arrangement of repayment moratoriums agreed between Estonian banks, it continues to be possible to apply for a moratorium in corporate loans, housing loans, leases and consumer credit.   

The length of the moratorium is up to 12 months for housing loans and up to six months for leases and consumer credit. Companies and groups of companies that have a credit limit of less than five million euros in one bank can get a moratorium for up to six months on the repayment of the principal of their loans. 

The common arrangement concerning repayment moratoriums is valid for loan agreements concluded before March 12 this year and moratoriums can be sought until Sept. 29. 

Eligible for a moratorium are clients who did not have problems with the repayment of their loans prior to the conclusion of the agreement on the common arrangement of repayment moratoriums. Seeking a repayment moratorium does not affect the client's credit score, either now or in the future.