World News

Swiss may have to top up coronavirus aid package amid rush for loans

By John Revill and Silke Koltrowitz

ZURICH (Reuters) – Switzerland may have to expand its emergency fund for companies hit by coronavirus disruption, a government official said on Monday, after banks loaned out 6.6 billion Swiss francs ($6.89 billion) in the first four days of the scheme.

That was around-one third of the 20 billion franc fund the government created this month for state-backed loans for businesses at no or low interest.

“Of course the issue of topping it up is on the agenda,” Erik Jakob, an official from the State Secretariat for Economic Affairs, told a news briefing in Bern. “It is now perhaps becoming a topic faster than initially thought.”

So far nearly 32,000 loans had been agreed in the fast-track scheme, with 207,000 francs the average amount.

Switzerland, with a population of 8.6 million people, has suffered 295 deaths from the virus, while the number of positive tests had risen to 15,475 on Monday.

Daniel Koch, head of the infectious diseases section at the federal health agency, said the situation seemed to have stabilised over the weekend.

“The increase is more or less the same as in the last few days, which is certainly a small sign that measures are working, but it is too early to draw conclusions,” he said.

He said there were still enough beds available in intensive care units, even in hard-hit Ticino canton on the border to Italy. The country had enough ventilators and masks for healthcare workers and was building stocks of material that could become scare.

To support the export-orientated economy in the crisis, the government has so far allocated 42 billion francs, the biggest economic aid package in Swiss history.

The money is needed as the outlook for the economy has sunk to its lowest level in five years, a leading indicator showed.

Michael Graff, head of forecasting at KOF Institute which carried out the survey, said he expected the barometer to reach levels last seen in the great recession of 2008/9.

Engineering group ABB <ABBN.S> and cement maker LafargeHolcim <LHN.S> have both made profit warnings while the government has urged people to stay home, limited public gatherings and expanded its short-time working scheme to compensate companies.

The Swiss army, carrying out its biggest mobilisation since World War II to fight the outbreak, has been called to assist authorities in all 26 cantons.

The country’s biggest bank, UBS Group <UBSG.S>, intends to pay its 2019 dividend despite calls from markets supervisor FINMA, the government and international banking groups to limit payouts as the coronavirus outbreak rages.

(Editing by Michael Shields)

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