Banks implement loan relief measures amid El Niño climate risks

Financial institutions are reviewing loan structures and assessing risks as the El Niño climate phenomenon intensifies. The phenomenon, driven by warming in the equatorial Pacific Ocean, is causing droughts and floods across various regions, including parts of Latin America, Southern Africa, and Southeast Asia.

Banco del Pacífico has announced a 90-day grace period for productive, consumer, and real estate loans to support clients in provinces under red alert due to the climate emergency. This measure aims to facilitate economic recovery for those facing difficulties caused by the weather event.

Similarly, Banco Bilbao Vizcaya Argentaria SA (BBVA) has instructed local risk teams to review loan books in regions such as Peru, Argentina, and Colombia. The bank is considering options like debt rescheduling for vulnerable customers. Analysts note that banks may increasingly need to offer repayment holidays for agricultural loans due to the insurance protection gap following severe climate events.