PROVIDENCE – Plunging stock markets. Near-zero interest rates. An economic slowdown, social distancing and self-quarantines. Any one of these alone could spell trouble for financial institutions, but when combined have created the perfect storm for the banking industry.
Yet leaders of local banks say they are well-positioned to weather that storm and are continuing a modified version of business as usual as they attempt to serve and reassure customers.
“Banks are in the best financial condition they’ve been in for 10 years,” said Hal Horvat, chairman and CEO of Centreville Bank. “We have a lot of confidence we’re going to work through this.”
Mark K. W. Gim, president and chief operating officer of The Washington Trust Co., agreed.
“While we are cautious about the near future and are prepared for the coronavirus to last longer than initially expected, we have a long history of prudent lending standards and are prepared to help the communities we serve as they work their way through this crisis,” Gim said.
And though restaurants, hotels and other businesses are shutting down or slowing down, banking activity has not fallen off as much as you might think. Steven Parente, senior vice president and director of retail banking for Bank Rhode Island, estimated the bank saw a 30% slowdown in normal transaction levels last week, though he anticipated a more dramatic drop-off in the coming weeks.
And while new account openings and money moving has slowed, phone calls from customers seeking information – or in some cases reassurance – about loans, investments and general finances are pouring in at a rapid rate.
Gov. Gina M. Raimondo, in a recent press conference, also sought to reassure people that this is not a replica of the state banking crisis of the 1990s, and that financial institutions have cash and capital on hand, a sentiment echoed by a recent statement from the Rhode Island Bankers Association and Cooperative Credit Union Association.
Despite the predictions for an economic downturn, this is also not like the 2008 recession, Horvat said.
Horvat likened the current economic conditions more to the aftermath of Sept. 11, though as he and other bank leaders noted, the current crisis is, in many respects, unprecedented.
“This is all brand-new to us,” said Parente. “We’re taking things day by day, and hour by hour, and knowing it may change at the drop of a hat.”
Nancy Lavin is a staff writer for PBN. Contact her at Lavin@PBN.com.
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