New banking conditions for clients
The economy is a living organism. It is constantly changing, but over the past decade there have been extreme events that I have personally observed. Since the beginning of the millennium, it has been standard procedure to keep money in the bank and earn interest on it. In 2013/14, banks began to introduce negative interest or fees for servicing money in accounts. At the time, everyone took it as a personal insult. Because of this, everyone moved to more “late” banks. Those banks that did not have time or did not want to join the general trend of introducing commissions. Nevertheless, this event was a turning point for the financial world. The moment when the client and the banks switched places and now the clients had to pay.
In the wake of this event, another interesting thing happened already in 2016. Euribor (interest rate on loans between banks) became negative for the first time. This was due to the desire of the European Central Bank to support the economy. But commercial banks with mortgage clients were not prepared for this situation. They found themselves in a difficult position - banks had to pay% to the client for the loan. Absurd - the banks decided and, almost unilaterally, began to add to the contracts the conditions for calculating the final interest for the client. But one client nevertheless went against the flow and sued the bank for about 100 euros, which the bank “brazenly” did not pay extra for the used loan. Of course, the surcharge for the loan taken was not included in practice. And the expediency of the 100 euros awarded is under strong doubt. Nevertheless, the event was very interesting.
Banks offer harsh conditions for payment holidays
As you know, during the pandemic crisis, most people turned to banks for payment holidays. For many, indeed, this is a way out of the current circumstances. But for some, the conditions may not seem entirely acceptable. How do you like this situation, if your payment to the bank is 900 euros per month today, but after the payment holiday agreed with the bank, you will have to pay 2000 euros per month? The increase in payments twice due to the fact that the maturity of the loan remains small. For example, a year or 2 and after a pause, the remaining loan amount will be divided into a very small period and thus increase the amount of monthly payments. Some clients are in this situation. Banking structures are extremely bureaucratic and inflexible, making it incredibly difficult to go against existing procedures. This is where a lot of problems arise when bank employees are ready to give up logic and follow existing processes and offer clients such harsh conditions.
One client, for example, did the following - he did not accept a payment holiday from the bank and, in desperation, he took a holiday on his own initiative. He sent a notice to the bank in advance, referring to the debtor's right to violate its obligations if the difficulties were caused by force majeure. The client told the bank that he could not somehow avoid the current situation, and these circumstances are beyond his sphere of influence.
In fairness, it should be clarified that after the publication in the news portals, the client was contacted again and offered solutions. The end of the story is still unknown.
Oil crisis
Thanks to the coronavirus pandemic, another event has taken place. Some experts in the news portals interpreted it as a condition in which one can believe in the existence of Santa Claus. One of the most important and strategic resources today is not exactly worth the money, but oil producers are willing to pay extra for it. Such a collapse is caused by worries that the reduction of oil production by countries is not enough. Under the agreement, the leaders agreed to cut only 10 million barrels a day. When the average consumption was reduced by 30 million per day. Thus, there is a real danger that soon there will simply be nowhere to store new oil. Since the resources of oil storage facilities are already running out. And stopping production is more expensive than paying extra to the client for the oil received.
Maybe someday we will start paying money to the employer for the job offered 🙂
You can read more about the oil crisis and oil futures here
I also encourage you to check out our latest article about the state of Traveltech startups in crisis.