Liquidity loans

Business loans have generally utilized NIBOR (Norwegian Inter Bank Offered Rates) and these loans have not had the same fall in interest rates. NIBOR rates reflect the international money market and don´t necessarily follow the same pattern as mortgage rates.

The Norwegian government has provided a range of financial aid packages for the business sector. Last Friday parliament put forward a proposal to reinstate State Bonds and to establish a State guarantee of up to 90% for new loans for small and medium businesses affected by the pandemic. The guarantee is in the order of 50 billion kroner and will be administered by the financial institutions. Sr-Bank has responded with immediate measures to be prepare for the rush of liquidity loan applications.

– We have been working through the weekend to make sure we have the competence and resources needed to provide business customers with the proposed liquidity loans. The loan will be granted to viable small and medium businesses experiencing a liquidity crisis. We are ready to accept applications and provide finances once the proposal has been approved. This proposal is vital for the survival of the business segment included in the scheme and to secure the employees, says Arne Austreid, CEO of Sparebank 1 SR-Bank.

Arne Austreid, CEO of Sparebank 1 SR-Bank

One of the terms of the liquidity loan states that the loan cannot exceed double the labour costs in 2019 or 25 percent of the 2019 turnover. In addition, the loan amount cannot exceed 50 million kroner. The loan must be repaid within three years and the company cannot pay dividends during repayment period.
– We will keep a close eye on how the companies are handling the crisis and what measures the government implement. Through 180 years of trading the bank has learnt how to handle ups and downs, and we will handle it now. We are here to support our customers, says Arne Austreid.

– Our business customers primarily have the 3-month NIBOR loans. This means any measures the central bank of Norway implements come into effect immediately. The NIBOR loans in the period 13th March to 20th March fell by 58 points which in turn have reduced our customers interest rates, says Lars Kristiansen, Regional director South-West in Danske Bank.

Rosenkilden has checked the situation and interest rates in several banks:

DNB:
Decided on Monday to reduce interest rates on business loans by up to 0,5 percentage points same as mortgage rates.  This in addition to the 0,35 percentage points given last week. For existing customers, it will come into effect 13th April. For new customers it will have immediate effect.

Sparebanken 1 SR-Bank:
Reduced all business loans not connected to NIBOR by 0,35 percentage points last week. Will come into effect 28th March. Introducing Liquidity Loans.

Handelsbanken:
Currently no changes. Money market very unpredictable, therefore difficult to set correct interest rates. Following closely and in direct contact with business customers.

Nordea:
Analysing the situation.

Danske Bank:
As Norway’s third largest bank we feel a social obligation to contribute to the measures implemented by the government. Currently in close contact with all business customers. Need to find good long-term solutions beneficial to all. No change to business interest rates as business customers have NIBOR loans.