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Tuesday, July 31, 2007

More requests to restructure lending from Fiji businesses

Businesses in Fiji are experiencing difficulties in meeting their loan commitments and are approaching banks to structure their credit facilities.

Read more in an article in the Fiji Times today, 31 July 2007, which is reproduced below.

"Bankers see squeeze, Tuesday, July 31, 2007

A leading bank says many of its commercial clients are negotiating to defer interest payments or restructure their lending.

Australia and New Zealand Banking Group general manger Fiji, Robert Bell, said most of the requests had come from business customers, not individuals.

He said a number of tourism operators were struggling. The bank had seen a gradual increase in requests from them to restructure lending.

The number of requests was still small but growing, he said. Following the events of December 2006, ANZ went out to its tourism-based customers and offered to review their loan arrangements.

Mr Bell said the bank's approach to all lending tended to be reasonably conservative.

"When times are booming it is sometimes hard for customers to understand why we might say 'no' to additional fund requests but over the long term these decisions protect customers as well as the bank," he said.

Westpac Banking Corporation said with a general decline in the economy certain segments of the business sector would find difficulty meeting loan repayments.

The bank's head of Credit and Operational Risk, Ashleigh Matheson, said the bank had taken a sympathetic approach to requests to convert loans to interest only while cash flows were depressed or under pressure.

"If the business cash flow is such that it will have difficulty meeting the principle repayments, there is little point in a bank not accommodating a request to move to interest only or even in some lowly geared businesses, an interest capitalisation period" Mr Matheson said.

"At the end of the day it is about supporting our good customers through difficult times not just being a 'fair weather' banker and deserting them when times are tough," he said.

Mr Matheson said the bank had noticed the impact of unemployment on its customer loans.

Many of these borrowers were employed in the construction and tourism segments of the economy and had little chance to find alternative employment until the economy improved, he said.

Mr Matheson said the construction sector had traditionally been driven by foreign investment.

He said while inquiries from offshore had been strong, proposed changes to non-resident borrowing regulations were making Fiji an unattractive proposition when compared to the alternatives available to these often large investors."

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