Top US banks are moving staff to handle loan requests
The four largest U.S. banks by asset – Bank of America (BofA), JPMorgan Chase, Citi, and Wells Fargo – are reportedly restructuring the roles of their employees to help them deal with bad or defaulted loans. Per Business Insider. Staff are also being relocated to meet the growing demand for new loans, with regulators encouraging lenders to switch staff.
The BofA has put together a group of experts focused on commercial and corporate lending to set aside other projects in favor of practical client work, and bankers are working on consumer credit like mortgages.
Meanwhile, Chase’s bankers have moved on to managing the bank’s portfolio of existing and new loans to assess the surge in demand – although there have been no formal changes in job title. And Wells Fargo touched a team of oil and gas bankers banded together to handle an influx of bad energy loans while Citi has a committee from its investment banking meeting to keep up with the volume of troubled loans and new inquiries.
As the initial loan forbearance is nearing its expiration date, the banks will need additional staff to assess the next steps. Banks will lose significant revenue for several months due to coronavirus relief Options they have extended like mortgage deferrals. To protect themselves from this, they have increased loan loss provisions: Chase, Citi, Wells Fargo and BofA together allocated $ 24.1 billion in the first quarter of 2020 to cover future loan defaults.
Many consumers have opted for these facilitation options – with banks often approving filings with no or no evidence of financial distress. But forbearance programs that started in March are nearing their expiration date, and the lenders are down prepare to investigate the extent to which customers receiving discharge actually need to defer payments decide what happens next.
Banks need to get a holistic picture of customers’ financial health in order to determine who to push back to repay – and that will likely need their hands on deck sifting through the thousands of account holders who have opted for some forbearance programs .
We are likely to see more employee movements in the coming weeks as lenders begin preparing for Paycheck Protection Program (PPP) lending. The banks are preparing for a huge influx of applications for loan waivers from PPP borrowers. Per Bloomberg.
To get an idea of the size of the applications it receives, lenders have issued nearly 4.3 million PPP loans totaling $ 500 billion, and the program allows all borrowers to apply for waiver. From the start, the PPP was a complicated program for banks to find their way around – right from the start sued for the preferential treatment of existing customers compared to handling the Small Business Administration (SBA) portal during processing subjects and lead to delays.
And while the guarantee for granting the loan waiver ultimately rests with the SBA, the banks will be responsible for sorting loan waiver requests before sending them to the SBA for approval. As this pandemic continues, banks are likely to continue to have to relocate on a large scale from various departments to focus on work related to credit.
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