How has banking accompanied companies in the COVID-19 crisis?

Destinations

Starting in March 2020, with the implementation of the state of alarm and the forced closure of businesses to control the advance of the coronavirus, companies began to redesign their strategies to maintain cash and survive in an environment of total cessation of activity but with intact obligations: rents, financing fees, building maintenance, supplier payment, etc. Resorting to bank credit was one of the first options, but how has the bank behaved?

CaixaBank, a commitment to economic recovery

“CaixaBank has made a determined commitment to be a key player in the recovery of the Spanish economy, facilitating the granting of credit and supporting the specific needs of this fundamental sector for the country. Through its specialized line, Hotels & Tourism, the entity has made specific measures available to clients in the tourism sector in order to preserve as much as possible the liquidity of companies in this situation of cessation of activity ”, sources from the entity have explained.

As they commented to HOSTELTUR, “during 2020 the demand has been higher than that of the previous year and has basically focused on loans for liquidity and moratoriums or deficiencies in mortgage loans, since, in general, investment projects and reforms have been postponed by companies “, adding that” that liquidity (through ICOs or not), and mortgage deferrals have been the two major measures that have contributed to sustaining companies. “

“Liquidity through or not ICOs and mortgage moratoriums have been the great measures that have contributed to sustaining companies”

Since March 14, 2020, the level of demand for ICO credits by tourism companies has been “approximately 45%”.

The banks assure that “the granting of loans has not been reduced”, although they do make more exhaustive analyzes of the risks and are more prudent. (Photo: Pixabay)

Sabadell resumes the exercise after Thomas Cook

In the case of Banco Sabadell, reveals José María Martín Rigueiro, Director of Tourism Business, “what we did was establish contingency plans, an exercise that we already did with the bankruptcy of Thomas Cook in the United Kingdom. That same accompaniment plan format, reviewing all clients one by one, is the one that we have resumed with the COVID situation and it is working. “

“I believe that the battery of products is total, we try to identify the best solution in a very complex situation, which changes every day, and in which our main objective is to enable companies to reactivate their activity when sanitary conditions do so. allow ”, he says

The Director of Tourism Business ensures that all entities are making the same decision: “Focus on our client portfolio”, although it clarifies that “of course any request that comes to us outside, is attended”. And in order to offer structural solutions, different scenarios are established “because we don’t want patches that we have to rebuild later.”

Accompaniment to the 13,500 clients in the sector, comments Martín Regueiro, “can range from deficiencies, moratoriums, both legal and bilateral; debt injection operations, through credit lines, both direct from the bank and those guaranteed by ICO ”.

To this is added “accommodating debt, rescheduling credit lines and trying to identify the best formula to reduce financial costs and provide a solution for the accumulation of liquidity”

Banca March and its support for the sector

“At first, the support was materialized through new financing, using the ICO guarantees provided by the State, as well as other types of guarantor entities such as ISBA. In the same way, mortgage and non-mortgage loans were granted, also including the implementation of deficiencies and moratoriums ”, he detailed Rafael Ferragut of Banca March, stating that this last alternative “has undoubtedly been a boost to the sector.”

Since the beginning of the pandemic, “the sector has notably increased its financing, providing itself with liquidity to ‘stay afloat.’ We have been practically without activity for 12 months, in many cases with zero income, and I dare say that having come this far is a success in the sector. But at the moment many companies are not thinking of incorporating more debt, which could possibly jeopardize the future project. For this reason, direct aid and those initiatives that allow companies to recapitalize are essential ”, believes Ferragut.

“Many companies are not thinking of incorporating more debt, which could possibly jeopardize the future project”, says Ferragut

The Director of the Tourism and Leisure Unit of Banca March, comments that from the public sphere, in addition to SEPI, which has already granted loans to companies to the sector for more than € 1,600 million, “we must highlight the mechanisms established by the RDL 5/2021 among which is the recapitalization fund endowed with € 1,000M that will be managed by COFIDES ”and from the private sector“ we will see capital increases, the incorporation of financial partners, or divestments ”,

  • The hotel sector faces 2021 moving key pieces

Accompany in the search for alternative financing

Apart from traditional financing, Banca March, an entity whose clients represent more than 30% of the Spanish accommodation offer, also offers other non-traditional solutions: on the debt side, with alternative financing structures and access to the capital market. And from the capital point of view, “accompanying partner incorporation processes, creation of vehicles for growth processes, monetization of the value of assets through sale & leaseback or coordinating organized processes for the sale of assets in order to maximize the price ”.

Among these solutions, co-financing together with institutional investors also stands out, “in which the bank and fund jointly finance, achieving flexible repayment structures adapted to the client”

Too Sabadell it deals with solutions “that go further, such as non-bank financing through our capital market management via funds”.

  • In search of new alternative financing formulas

The vaccine, the lifesaver

The three banks are confident that this year there will be a recovery in tourism activity, which will go hand in hand with vaccines against COVID-19 and the launch of the digital green certificate.

“Vaccination worldwide, and especially in sending and destination countries, is undoubtedly what allows us to be optimistic. However, the pace is worryingly slow, and for Spain it is essential that it move faster, “he says. Rafael Ferragut, pointing out that “we are highly conditioned by the decisions made by the governments of the issuing countries, and the news coming from the United Kingdom and Germany regarding travel limitations is not good. We must continue working from all areas to start the summer season, and that this year it is not interrupted ”.

“It will not be a good tourist season, but it is essential that there is a season”, Ferragut sentence

Jose Maria Martin Rigueiro, from Sabadell, also believes that everything will depend on group immunity: “we understand that if a vaccination level of 70% is achieved, surely during this summer and the last quarter of the year, there will be an important recovery, motivated by the national tourism but also the arrival of international tourists ”.

In CaixaBank “We are convinced that this recovery will come, the uncertainty is when and with what force. It is very clear that there is a huge, contained demand for travel and vacations, that as soon as it is possible to travel with some safety it will materialize. Hopefully it will be as soon as possible and all the actions that take place in this regard will be welcomed: European health passport, speed of vaccination, security protocols in establishments, etc. ”.

“We expect a reactivation of the demand for credit, but already aimed at financing those permanent investments that our hotel plant needs”

Once the activity is reactivated, they say from the entity, “we expect a reactivation of the demand for credit, but already aimed at financing those permanent investments that our hotel plant needs to continue being world leaders in tourism competitiveness, investments aimed at digital innovation and The sustainability”.