By CLARISSA MOI
THE slowdown in business activities in the past 18 months has affected defaults in loan repayments to banks, Bank South Pacific (BSP) Financial Group Ltd chief executive officer Robin Fleming says.
He said the bank was undertaking recovery action.
Ialibu-Pangia MP Peter O’Neill told Parliament recently that the banks had been repossessing assets due to the negative effects of the Covid-19 on businesses.
Fleming said there had been instances where the bank had to exercise its legal rights under the security provided by the customer.
He noted that some businesses had already been recording low profits.
Debtor collection difficulties before the Covid-19 and the further downturn in business activities had made it harder for businesses in certain sectors. “The residential property investment sector has seen a supply of properties outstrip demand for rentals,” Fleming said.
“And investors who had over-leveraged their properties or did not have recourse to funds other than property rentals have been more vulnerable than others.
“If those borrowers are not able to meet their payments, then BSP will have moved the customer to our asset management department to initiate a process of recovery that may involve sale of properties.”
Fleming said the transport sector was also recording reduced revenue, being paid late for services rendered.
“If those customers have been unable to make their payments on loans, then the loan is moved to asset management and sale of vehicles or other assets provided as security will have commenced,” he said.
He said that if a business had been directly affected by Covid-19 pandemic, BSP had provided relief for three months on payments, but repayments needed to recommence after that period.
“BSP did reduce its interest rate on all loans last year by one per cent on all products not just working capital overdrafts and also reduced loan repayments to reflect the lower interest rate,” Fleming said.
By CLARISSA MOI