Featured Product

    MAS Announces Additional Relief Measures Amid COVID Crisis

    June 03, 2020

    MAS, along with the Ministry of Finance (MOF), the Inland Revenue Authority of Singapore (IRAS), and the Enterprise Singapore (ESG), announced a package of measures to support those that may face cash-flow constraints as a result of providing relief to tenants as proposed under the COVID-19 (Temporary Measures) (Amendment) Bill (also known as the COVID-19 Amendment Bill). MAS has worked with banks and finance companies to enhance the current relief measures for landlords affected by the COVID Amendment Bill. This follows an announcement by the Ministry of Law on rental relief measures that will be tabled in Parliament under the COVID-19 Amendment Bill.

    This package of measures will help landlords with their existing loan commitments and ease their cash-flow needs. The new measures complement relief measures announced by the Ministry of Finance, MAS, and the financial industry earlier. Banks have provided assurance that there will be no automatic enforcement of loan covenant breaches with landlords as a result of the constraints and requirements imposed on the landlords by the COVID-19 Amendment Bill. Banks will work closely with landlords to address any such loan covenant breaches (for example, debt service covenant and interest service covenant), such as by granting a waiver of the breach and/or revising the loan covenants to take account of the current circumstances. The credit relief for landlords includes the following:

    • Landlords who are individuals and are current in their loan repayments as at February 01, 2020 can defer both principal and interest repayment up to December 31, 2020 if they are required under the COVID-19 Amendment Bill to provide their tenants rental waivers or payment rescheduling. Individual landlords who successfully apply for a reduction in rental waivers on the grounds of financial hardship are also eligible for this relief measure. Interest will accrue only on the principal amount deferred and no interest will be charged on the deferred interest payments.
    • Individual landlords can also opt to extend the loan tenure by up to the corresponding deferment period to ease monthly installments when they resume regular repayments. Their credit scores will not be affected when they take up payment deferments.
    • Landlords who are small and medium enterprises can already apply to defer principal payments on their commercial and industrial property loans. Most of the applications received so far have been approved. Landlords who need additional credit to meet their immediate cash-flow needs can apply for loans under ESG’s Temporary Bridging Loan Program or Working Capital Loan Scheme through their banks and finance companies.
    • The larger corporate landlords, including real estate investment trusts listed on the Singapore Exchange (S-REITs), are encouraged to approach their banks or finance companies to explore funding solutions to meet their cash-flow needs. Some have already requested for payment deferrals or temporary loan covenant waivers, which banks have acceded to.

    In view of the new rental relief under the COVID-19 Amendment Bill, MOF and IRAS will further extend the timelines for S-REITs to distribute their taxable income derived in FY2020 and FY2021. For taxable income derived in the FY ending in 2020, S-REITs will have until December 31, 2021 to distribute them; and for taxable income derived in the FY ending in 2021, they will have until December 31, 2021 or 3 months after the end of FY2021, whichever is later, to distribute them. The extension will give S-REITs more flexibility to manage their cash flows amid a challenging operating environment due to COVID-19. IRAS will provide further details of the change by the end of June 2020. As with the previous industry support packages, the enhanced relief measure for individual landlords will be provided on an opt-in basis. As payment deferments and loan tenure extensions will result in higher overall interest costs, borrowers should carefully consider the additional interest costs they will eventually have to bear, and balance this against their need for cash-flow relief. Banks and finance companies will aim to process all applications promptly.

     

    Keywords: Asia Pacific, Singapore, Banking, Credit Risk, COVID-19, REIT, Payment Deferrals, Loan Moratorium, COVID-19 Amendment Bill, MAS

    Featured Experts
    Related Articles
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.

    May 12, 2022 WebPage Regulatory News
    News

    EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA

    The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.

    May 11, 2022 WebPage Regulatory News
    News

    EC Mandates ESAs to Propose Amendments to SFDR Technical Standards

    The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.

    May 11, 2022 WebPage Regulatory News
    News

    EBA Examines Supervisory Practices, Issues Deposits Reporting Template

    The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),

    May 11, 2022 WebPage Regulatory News
    News

    SNB Updates NSFR Forms and FINMA Consults on Operational Risk Circular

    The Swiss National Bank (SNB) published Version 1.2 of the reporting forms (NSFR_G and NSFR_P) on the net stable funding ratio (NSFR) of banks, along with the associated documentation.

    May 10, 2022 WebPage Regulatory News
    News

    US Agency Publications Address Basel, Reporting, and CECL Developments

    The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances

    May 09, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8191