Piyush Gupta, CEO of Singaporean bank DBS, said many businesses may not survive when governments roll back measures that are currently keeping them afloat.
Gupta was referring to a concept popularized by Austrian economist Joseph Schumpeter, which describes the process of dismantling the old to make way for the new and improved.
For banks, there would be "far more damage" to their balance sheets, said Gupta. But banks globally have also entered the current pandemic-induced crisis on stronger footing and can take on "a lot more pain" compared to the global financial crisis more than a decade ago, he added.In Singapore, where DBS is based, the government has projected an— which would be the country's worst downturn since its independence in 1965.
The city-state's financial regulator and central bank, the Monetary Authority of Singapore, said last week that nearly 34,000 mortgages now enjoy deferment of principal or interest payments or both. It added that more than 5,300 small- and medium-sized enterprises have deferred repayments on secured loans.Ravi Menon, managing director of the MAS, said the relief measures will "see us through the worst part of the crisis" but they cannot go on forever.
"I think you will see more stress on the financial system in the later part of this year and next year without a doubt. And that's just because the fallout of the macroeconomic shock has still to filter through the financial system at this point in time, I think it will come," he said.
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