By Alice Uribe

Banks are seeking urgent authorization from Australia's competition regulator for a renewed program of loan deferrals amid Sydney's worsening Covid-19 outbreak, according to the Australian Banking Association.

The national package would be available to borrowers significantly affected by current lockdowns or recovery from recent lockdowns, irrespective of geography or industry.

Australia's banks had largely run down loan deferrals that were introduced in 2020 during the Covid-19 outbreak, but their return comes as Sydney grapples with the infectious Delta strain.

"This pandemic demonstrates why strong and stable banks are so important for the nation's economy. Banks are ready to do whatever they can to shield their customers from the impact of these recent lockdowns", ABA Chief Executive Anna Bligh said.

For home loans, there will be a range of support measures, including deferrals on a month-by-month basis, and up to 98% of small businesses will be able to access three-month repayment deferrals, with loan terms extended accordingly.

The ABA said this will be only for loans where repayments are up to date, or undergoing a payment program. "Banks also stand ready to support larger businesses and they will be assessed on a case by case basis," the ABA said.

Write to Alice Uribe at alice.uribe@wsj.com

(END) Dow Jones Newswires

07-08-21 2304ET