Commercial banks are not doing enough: Ministry of Finance
The Ministry of Finance believes commercial banks are not doing enough to assist its customers in their stimulus packages.
The Chief Executive Officer for the Ministry of Finance, Leasiosiofaasisisna Oscar Malielegaoi, said offering to top up loans is creating a “debt trap”.
“In actual fact, we are saddened that the banks are not doing enough to assist their customers,” he told the Samoa Observer.
Leasiosio added that banks like to announce their profits in millions.
“Yet [in light of the coronavirus pandemic lockdown] they look at the Government instead; they should ask what they can do for their customers. They have been earning millions of profits,” said Leasiosio.
He said part of the Government’s stimulus package; they are offering a subsidy to pay for two percent to banks for loans for three months.
“The rationale behind this is to free up cash so the people can have funds in their accounts. The intention was to give people free money, the government pays the two percent interest while you use that money for daily necessities,” he said.
“We were hoping the banks would match or even better our offer unfortunately; they are not offering that.
“What is the use of extra loans now from the banks, people don’t need extra loans; what they need are interest assistance or grace periods”
Leasiosio said the people don’t need more loans. This is “creating a debt trap” for the people.
Chairman of the Bankers Association Bernie Poort said that borrowing more money is not the only solution.
“And in many cases customers are restructuring their facilities and switching to interest only, so they don’t accrue additional debt for when we come out the other side of this,” Mr. Poort said.
The Bankers’ Association of Samoa are impressed with the range of packages, interest rate and fee reductions offered by the Commercial Banks in Samoa to help customers through this coronavirus economic crisis.
“We continue to encourage all customers to talk to their respective banking partners and work through the most appropriate solution for their individual requirements,” said Mr Poort.
He noted that all the banks in Samoa are working closely with their customers on finding solutions to ensure not just their immediate sustainability but in many cases the customers’ survival.
“Banks are acting as ‘shock absorbers’ for the economy by ensuring businesses’ continue for three or six months, sometimes longer, but it will inevitably reach a crisis point for many, and sadly not every business and household will make it through,” Mr. Poort said.
“Banks themselves will not be immune to this economic fallout and certainly cannot do it on their own.
“We are likely living through what will be economically the most challenging and difficult times of our lives and the Government needs to work closely with the private sector including the banks to ensure the Samoan economy once again thrives.”
Last month the Samoa Commercial Bank Limited (S.C.B.) stepped up to help their customers by releasing a list of support measures for their clients in the wake of the coronavirus pandemic lockdown. The S.C.B. offered support to small to medium businesses customers, individual personal loans as well as clients under the Samoa Business Hub, Agribusiness and Low Income Schemes.
Business customers are able to apply for repayment deferrals for up to three months, with the chance to reduce payments by reconstructing payment amounts and extending loan terms.
The restructure fee will be waived for S.C.B. customers.
The Bank of the South Pacific (B.S.P. Samoa) announced that they are monitoring the evolving nature of COVID-19 and is arranging relief packages to assist its customers during this period.
BSP Samoa will be providing relief packages for its customers including, a three months interest only for businesses of all sectors.
(This has already been effectively applied to all eligible business customers), a three months repayment suspension only if reduced hours or loss of employment for personal loan customers and a three months P&I repayment holiday on a case by case basis due to loss of employment for home loans.
While the National Bank of Samoa (N.B.S.) was encouraging their customers to talk to the bank as soon as possible as the country braces for the financial impact of the coronavirus restrictions.
Solutions offered by the bank to relieve pressure off their clients include reducing or temporarily moving to interest-only repayments, helping with restructuring loans, consolidating loans to help make repayments more manageable, providing access to short-term funding, and reviewing some of our debt recovery actions.
Earlier in March, the A.N.Z. Pacific introduced a number of support measures for individuals and businesses in the Pacific, including a reduction of 0.50 per cent per annum on all local currency overdrafts, variable term loans and variable home loans.