Tuesday 06 July 2021 10:43 am

UK banks bolster debt collection teams ahead of first Covid loan repayments

HSBC was the only BIg Four bank to see its shares rise in 2023

The UK’s leading banks are bolstering their debt collection teams as the first repayments of emergency Covid loans fall due.

Britain’s four largest banks have hired over 750 workers in their debt collection units in an effort to manage a wave of potential defaults.

NatWest has taken on 150 extra staff to handle chasing Covid loan repayments, while HSBC has hired almost 200 extra staff.

However, banks are training staff to enable them to empathise with a borrower’s situation, particularly if they are experiencing financial strain and struggling to service Covid debts.

The initiative is intended to prevent a repeat of the aftermath of the financial crisis in 2008, where banks absorbed enormous reputational damage as a result of deploying heavy handed debt repayment processes.

“We did bootcamp training to make sure they’re all ready to go” Hannah Bernard, head of business banking at Barclays, told Reuters.

The UK government initially estimated that losses on the most popular bounce back loan scheme that enabled small businesses to borrow up to £50,000 could be as high as 60 per cent, when taking into account credit problems and fraud.

If this is the case, then the tactics banks employ to call in debt will be brought into the spotlight given the high level of debt collection activity they would have to embark on.

“What we are better at now, and it’s not just banks but I think society, is understanding more about vulnerability, the stresses people have and the connection between one’s business and personal life” said HSBC’s head of commercial banking Amanda Murphy.

The initiative comes as the Public Accounts Committee, the watchdog responsible for overseeing government spending, warned last week that taxpayers could lose tens of billions of pounds through support schemes set up to limit the impact of Covid-19.