Banking and capital markets firms have industry-specific tax reporting and compliance requirements. But the issues they’ll face filing and paying direct and indirect taxes are likely similar to those faced by other industries. For example, subject matter experts may be working at a distance, collaboration tools may not be wholly effective, processes may be undefined and so on. In the short term, these are probably meeting tax compliance requirements and may be manageable, but few firms have tested anything like this at scale over a long period. It should be noted that changing the locations of where employees perform their work may have federal and state tax implications.

Dear Mr. Sunil Kumar, thank you for your answer! I appreciate the sugestions related to the regulatory/compliance issues. Do you think that there will be a strong impact of the pandemia on the changes on bank business models? I mean that it will foster the utulisation of financial technology in traditional banking services (e.g.in their front offices)?

Thank you! OK, so I have already three dimensions: adjustmentsin the regulatory/compliance areał (execution), financial technology impact and the growtht of NPLs in some banks and the negative impact (especially highly possible the impact of SMEsin some economies). Are there any other imoortant dimensions? May be some specific in particular countries?

When certain safety rules are introduced to limit the development of the SARS-CoV-2 Coronavirus pandemic that causes Covid-19 disease, such as a recommendation or order sanctioned by law to remain in a home quarantine, to temporarily close certain types of stores, service establishments, to close restaurants, hotels, museums, city ​​parks, theaters, cinemas, other cultural centers, etc., consumption drops significantly and therefore credit purchases also fall. Many enterprises limit the implementation of investment projects, so the demand for business loans is falling, which is the main source of income from the core business of commercial banks operating according to the classic model of deposit and credit banking. Also the value and number of investment banking transactions also decreases if the economic downturn lasts for at least several weeks or months. In some countries, in accordance with the guidelines of anti-crisis interventionist economic policy, borrowers have the option of postponing loan installments for a period of max. several months without additional costs. Therefore, in the situation of deepening economic downturn and the development of the economic crisis caused by the development of the SARS-CoV-2 Coronavirus pandemic, then revenues from the sale of loans and other financial instruments strongly decrease. Bank profits are also falling to a large extent. On the other hand, due to the development of the SARS-CoV-2 Coronavirus pandemic, the digitization processes of the economy are accelerating significantly. Currently (April 2020), in many industries and sectors, more and more companies are developing their activities via the Internet, remotely providing their services and selling their products under e-commerce. Many companies that did not do this before now switch to remote activities, carried out electronically via the Internet. The importance of Internet marketing, including viral marketing, Real-Time marketing conducted on social media portals is increasing. The development of electronic banking is also increasing, including online and mobile banking. The share of payments made electronically, without cash via the Internet and during payments with the use of electronic bank cards is increasing. More and more citizens paying in stores do not use cash but make contactless payments. Limits for all contactless payments made with bank cards have just been increased in some countries. In connection with the above, the development of the SARS-CoV-2 Coronavirus pandemic increases the share of payments made electronically in the context of all payments made in national economies and accelerates the development of online and mobile banking.

Greetings.

Dariusz Prokopowicz

Dear Mr. Dariusz Prokopowicz,

thank you for the answer. It is very profound what I appreciate very much. I wonder what will be more harmful for banking sectors: the fall of credit purchases and in consequence lower bank profits or may be the higher level of non-performing loans, as a result of the same process which you have described: closures of many businesses. It will impact on banks as well. Probably both of them will impact negatively and the net result will depend on the structure of activity and assets of a particular bank. Anyway, thank you very much!

Greetings,

Piotr Łasak

Dear sir,

There is denying the fact that this pandemic is affecting and going to affect Banking industry world-wide.

Banking is Business when the raw material (Deposits) are converted into Loans and investments. The difference of interest rate (NIM) is the main source of earning for the Banks. Now in the lockdown periods when the economic activities are on very lower side how do you expect that the Banking Business will be smoothly going? Please appreciate that the demand for credit is continuously going down... why the businessman will pay interest to the Bank when he is not able to sell his goods? This demand lost for say three months is lost for ever. The Banks profit margin will be low and their Non-Performing assets will be high as the money is not rotating at the business so the borrowers will not be able to repay their loan liabilities. The time period given by Reserve Bank of India for not treating these loans as NPA is only Three months. After this period the Borrowers are supposed to pay their monthly / quarterly obligations with compound interest. How they will manage to pay is anybody's guess. This will affect the economy and all economic activities directly.

Yes, good impact is extensive use to digital channels by the general public thus inculcating habit of using these channels for small and big payments. Pl. note that this is merely a service and not a business activity for the Banks.

I hope I am clear on the point.

Deposits will be cut down, rapid fallen down in banks rate. High volume of liquidity crisis may be faced by the banks. Policies and regulations may be changed.

Thank you very, very much for the asnwers!

Another thing to consider is the surge in liquidity risk caused by the increased usage of lines of credit, loan commitments, letters of credit, and credit default swaps by a bank's clients. These off-balance sheet items can suddenly jump onto the bank's balance sheet during a pandemic as clients try to use these instruments to increase their cash balances to offset lost income and maintain their liquidity.

Piotr Lasak

Impairments

Business owned by customer is hampered, so income decrease. This has hampered the ability to payah installments to banks

In my view the following items:

- Digital transformation will fast forward and banks who are at the forefront (agent via videoconferencing, automation, ...) gain from this situation through market share and customer satisfaction. Corona will test the operational processes of each bank.

- Financial impacts stemming from provisions for credit losses (NPLs), market losses (financial assets) and reassessing NII hedging strategy (interest rate curve changes). This will lead to scrutiny by regulators (ECB, national banks, FED, ...) and many interactions between them to ensure when banks need to implement recovery plans to hold adequate liquidity and capital. As well, to navigate their own policies to help banks to weather the storm. As we all know, banks play a vital role in the economy and regulators/governments will look at scenarios to support them during these times.

Geography-wise best to link impact on banks based on importance of banking systems for the economy (EU lending vs US lending), capital reserves (CET1), governmental measures taken (lockdown periods) and healthcare systems in place. For example, expect higher impacts for banks operating in Brazil, which score bad on these measures.

Non Performing FINANCING increase

In my place, banks office not close on covid 19 time, so staff of the banks not lose jobs. Bank office give service 09.00 - 15.00.

Is the process of jobs losses a consequence of the pandemia or rather a consequence of the process of digitalisation of financial services? I have spoken with a person who is working in the Chinese financial sector and actually she is determined to change her qualifications and find a job in different sector because she knows that during the next decade amne people will be exchanged by fintechs. So in my opinion the pandemia can only accelerate the process.

Yes it is. Lose jobs coused by digitalisation in financial sector. On covid 19 only situation give service to it

Lending increases as companies have to restructure their debts and/or find liquidity in order to cover their costs. This is why banks need to provide liquidity to companies -credits- so that the economy, employment and competence continue working. The State usually is involved as it happens that banks do not want to lend money to some companies as they consider that some companies would not recovered from the situation (Net Income and Operative income is highly reduced).

Rigit. The sate through fiskal and moneter policy Will suporter Q bank bank to provide Credit to companies

First, the banking is faced with the difficulties of customers to pay their credit installments which can lead to increased risks for the banking

second, the pandemic as the trigger for the massive shift in banking digitalization (my prediction)

third, the transition to the digitalisation of ban will reduce manual labor in banking

fourth, the use of payments through fintech in e-commerce will increase and encourage the switch of merchants to replace payment models that are still manual

fifth, our wealth is only in numbers haha haha

All right. If bank institution reduce for staff, so human resources need other job n increase other competence.

As for the impact of Covid19 on Banking, during the Covid of the banking sector, it experienced financial turbulence where the economy did not work and needed relaxation for creditors so that the money market was not too eroded, this happened because the velocity of money was very less, the income of the people decreased, the cost was a lot, so the bank must also be careful in lending to the current situation, it needs government regulation, in this case, the central bank for making decisions so that businesses can continue their business.

It may lead to the rate of digital banking to increase to the extent that was never seen before starting the pandemic disease.

Although it is difficult to forecast the economic impact and specific impact on financial/banking sector due to the COVID-19 crisis, there will be reduction of interest spread, diminishing of other income etc.

I have observed a reduction in both retail borrowing and saving on accounts as customers withdraw significantly more cash than normal. This coupled with three to six month moratoriums on payments for all credit facilities could lead to a decrease in liquidity for the banking sector.

Loans and NPL of the banking industry will be affected which will have an effect on earnings. Monetary measures to lower SRR, overnight interest rates and re-classifcation of NPLs (3mth or 6mth) will have a positive on Bank's earnings. The cost of funds and provisions for NPLs will not have such a drastic impact on banks' earnings. The credit administration process in loan approval is important as most loans are subjected to credit guidelines like single customer limit, industry exposure and collateral. The recovery process of NPL might take time but the exposure will not be as significant.

loans and interest rates are affected. The financial risk management will be affected. Closure of branches due limited staff.

Piotr Lasak the results will be clear, where loans will stop because of low activities, So, there are banking activities, then decreasing the bank's profitability.

following

Banking Industry earnings will surely drop in the short term as both interest and non-interest based activities shrink. If banks are exposed to firms and industries, that recover late from the COVID 19 impact, then the effect of NPL build up will have a long term impact on the banks.

Slowing down of business activities, lending less, small businesses will face liquidity problems, npl will increase, digital banking will increase as well as the risk of debt

tried to analyze the impact of COVID 19 on the Ethiopian Private Banking System

We should go directly to the impact of covid 19 on the different sectors of the economy. If these sectors are affected by default the banking sector will be affected. Covid hit all economic and social activities and as a results the banking sector will remain helpless if all banks are operating there will be no credit facilities, non performing loans go up, more use will be done by e banking and this may involve risk, bank liquity and profitability will go down, risk management departments have to do stress testing under different scenarios

Covid 19 give impact to banking industri are ability pay customer a decrease so non performing lan go up, revenue of the bank decrease, and dificult to bank likuidity

The degree of transmission of the impact of COVID-19 on the banking system is exacerbated by high uncertainty, which weakens investor and consumer confidence. Other effects are amplified by the financial vulnerabilities caused by the volatility of capital flows, the shock of commodity prices, the decline in economic growth, macroeconomic and monetary instability. Falling incomes and rising uncertainty make lending to households and businesses more risky for banks. The sudden rush for banks is worsening the liquidity of the banking system, and financial conditions are tightening, limiting households and businesses' access to credit, and thus hampering their ability to weather the shock. And gets us into a vicious cycle of a banking crisis. Coordinated and urgent strategies for flexible monetary, fiscal and macroprudential policy are needed.

E-Banking/Net Banking/M-Banking will have to be promoted even in rural areas to the maximum possible extent.However, the safety of staff as well as customers should be the prime focus.However,it must be noted that many issues,unique in nature,may be experienced in Branch Audit.

Very good discussions.

The impact of the SARS-CoV-2 (Covid-19) coronavirus pandemic on commercial banking in some countries is large. On the one hand, the accelerated digitization of the economy, the development of e-commerce, commerce via the Internet, the development of e-logistics, electronic payments causes the accelerated development of electronic internet banking, including mobile banking. Commercial banks with a strong position on the electronic banking market could afford to remodel their offers, increasing their profitability. However, on the other hand, because many business entities received non-returnable subsidies for maintaining their business, for maintaining employment despite suspended or limited-time business activities, they reduced their operating costs and did not take loans. In the country where I currently operate, the survey shows that 3/4 of entrepreneurs do not plan to implement investments or expand their business activities, because the possible second wave of the SARS-CoV-2 (Covid-19) coronavirus pandemic is still a great unknown. As almost all companies do not take loans at present, the lending profitability of commercial banks has decreased significantly. Since lending is the main source of income for commercial banks operating according to the classic deposit and credit banking model, the profits of these commercial banks for 2020 may be lower than in 2019. This would be the first decline in banks' profits since the global financial crisis of 2008 or the earlier crisis caused by the stock market crash of dotcom tech companies listed on the stock exchange of NASDAQ tech companies at the turn of the century (depending on which global economic crisis caused greater negative economic effects in the banking system of a particular country). By analyzing the impact of previous global financial and economic crises on financial systems, including banking systems, it is possible to predict a large, rather economically and financially negative impact of the current economic crisis caused by the SARS-CoV-2 (Covid-19) pandemic on commercial banks operating in individual countries. I wrote more about this in my publications on this subject on the Research Gate portal and on my profile on the Research Gate discussion forum. I conduct research on this issue, including on the subject of the analysis of the sources of the global financial crisis of 2008 and the participation in this crisis of investment banking, the economic effects caused by this crisis on financial markets, on the economy, on the finances of the public finance system of the state, etc. available on the Research Gate portal. I invite you to research cooperation.

Best regards,

Dariusz Prokopowicz

I would like to add a few words to this discussion. Well, in the country in which I operate, I observe a large impact of the SARS-CoV-2 (Covid-19) coronavirus pandemic on central and commercial banking. The impact of the Coronavirus pandemic on central banking consisted in a significant reduction in interest rates and the purchase of receivables of troubled commercial banks, i.e. easing the monetary policy and indirect participation of the central bank in the process of rolling over certain previously issued series of bonds and treasury securities. In this way, monetary and economic policy makers used the available instruments to start the processes of activating entrepreneurship. On the other hand, the impact of the Coronavirus pandemic on commercial banking consisted in accelerating the development of electronic internet banking, including mobile banking, accelerating the digitization of banking transactions and operations, increasing the scale of payments made electronically, etc. In the anti-crisis shield, many enterprises received financial support as part of state aid, received tax breaks and / or non-returnable subsidies for maintaining business continuity and maintaining employment despite the real suspension of business activity, so the scale of contracting new economic loans dropped many times. Therefore, commercial banks, as part of new banking product offers, using electronic marketing, offered the so-called for example, zero-cost accounts with hidden costs. Sometimes these new, seemingly attractive offers include an increase in fees for certain types of financial services rendered more and more often remotely via the Internet. Commercial banks, in connection with a significant decrease in lending, in order to protect themselves against the scenario of presenting financial losses in financial statements for 2020, increase fees for specific, selected financial activities and services. Commercial bank customers more and more often consider switching to fintechs and investing in various assets without banking offers. This is, among other things, related to very low interest rates on bank deposits, which, taking into account the increase in inflation and the tax on capital transactions (19 per cent), are actually negative in terms of real profitability.

Best regards,

Dariusz Prokopowicz

To my considerations above, I would like to add that the impact of the SARS-CoV-2 (Covid-19) coronavirus pandemic on the banking sector in terms of financial results will be visible in early 2021, when the financial statements for commercial (issuing securities) 2020 year. In addition, the financial results for the entire banking sector for 2020 will be announced by the central bank. Financial data (quarterly financial results) from commercial banks (which are issuers of securities) are already appearing, suggesting that the overall financial result for 2020 will be much lower than in previous years. This thesis is also confirmed by significant drops in the valuation of securities (shares) of commercial banks listed on stock exchanges recorded in the last months. Best wishes,

Dariusz Prokopowicz

Interesting question Piotr Lasak . Would be interested to know as well.

Thank you Md Atikur Rahaman!

I work on the topie... https://ibima.org/accepted-paper/the-impact-of-the-covid-19-on-eurozone-and-the-united-states-banking-sectors-a-contribution-to-the-post-pandemic-scenarios/

In many countries, credit stocks fell in 2020 due to the economic downturn caused by the SARS-CoV-2 (Covid-19) coronavirus pandemic. Enterprises did not take out loans because they received financial support from public aid as part of the anti-crisis economic policy program and did not implement new investments. In some countries, in 2020, lending only for some categories of consumer and / or installment loans was at a similar level as in the previous year 2019. Therefore, the financial results of banks operating in the formula of classic deposit and loan banking may be significantly lower in 2020 compared to 2019.

Best wishes,

Dariusz Prokopowicz

Thanks Dariusz Prokopowicz!

I understand that the banking activity overall will be significantly reduced, comparing to the previous time. The pandemic will impact on the financial results in the banking sectors (banks returns). But I am afraid that the pandemic will trigger more serious changes, especially in bank business models. The pandemic is relatively long so the expected changes might be deeper than we already assessed.

Best regards,

Piotr