Bad debts the big problem

For the third time in about five years our banking system has been reviewed by yet another externally sourced “expert”. The final report identifies the major problem of the Cook Islands banking system as $45-60 million dollars of non-performing loans (NPLs). These loans, on which the borrower has stopped making payment, comprise 16 percent of all lending. Bad loans are said to constitute the primary reason for raising the risk profile and cost of lending in the Cook Islands (three percent of the five percent difference between Cook Islands bank rates and those of Australia and New Zealand).

For the third time in about five years our banking system has been reviewed by yet another externally sourced “expert”. The final report identifies the major problem of the Cook Islands banking system as $45-60 million dollars of non-performing loans (NPLs). These loans, on which the borrower has stopped making payment, comprise 16 percent of all lending. Bad loans are said to constitute the primary reason for raising the risk profile and cost of lending in the Cook Islands (three percent of the five percent difference between Cook Islands bank rates and those of Australia and New Zealand).