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Cook Islands Government threatens to legislate to force banks to give debt relief to those struggling to make repayments in economic downturn.
Government has warned banks that it will change the law to make them comply with a three-month debt repayment holiday.
The state-owned Bank of the Cook Islands is offering the payment break, which was announced as part of government’s Covid-19 economic response package.
But Bank South Pacific and ANZ said they would only give this support to personal customers who showed they were adversely affected by the crisis.
Deputy Prime Minister Mark Brown told Parliament: “This is unacceptable.”
Everyone, regardless of whether they were directly affected or not, should benefit from this debt repayment holiday, he said.
“The time for protecting your balance sheet is over, if you do not come to the party then I will look to make you comply, including changing the law,” Brown said in Parliament.
“I expected our banks to comply on a blanket basis … If these banks are wanting their clients to spend their resources first before they themselves will be sharing the pain that is unacceptable.”
David Street, the chairman of the Bankers Association Cook Islands, said he would happily address the concerns with all banks. As this edition went to print last night, there was still no response from the banks.
Opposition Democratic Party leader Tina Brown said legislating or making changes to the law to force the banks to provide loan repayment holidays was not the answer.
“My request to the Deputy Prime Minister is that it’s best to have a discussion with the Bankers Association. Please let’s not allow the emergency situation that we are in for us to make rash decisions.”
Mark Brown said he met with the Bankers Association and had made the government’s position very clear.
“This is something the government will insist with our banks, just as the taxpayers in this country are putting in place a $32 million (US$19 million) support package for this Supplementary Budget, we expect those who have made money during the last seven to 10 years to also contribute to our survival.
“And make no mistake, over the last eight years of economic growth globally the finance sector and the banks in particular have generated billions of dollars in profit.”
One BSP customer, disappointed to learn the debt repayment holiday applied only to those whose jobs are directly affected, is calling on the government to take a strong stand against these banks.
“The debt repayment holiday would give us some relief especially in diverting that cash to other things or even families who have lost jobs. We are a small nation who rely heavily on family support.
“I hope the stern warning from the Deputy Prime Minister would get these banks to comply with the commitment made by the government. It would be really good if all banks come to the party. If there was ever a time we need the assistance it is now!”
SOURCE: COOK ISLANDS NEWS/PACNEWS
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