But the government's recent merger of its Savings Bank and Development Bank into the BCI bringing deposits worth around $3 million under one roof is likely to push the BCI into commercial banking.

BCI board chairman, Vaine Teokotai, responding to Cook Islands' press comment that it is too risky for short-term deposits to be used for development finance, said that a key reason for ignoring the advice from the ADB is the bank's survival. He explained: 'the most essential element of a bank's mission is economic sustainability.' He said that although the government 'is not seeking the high returns expected of commercial banks such as Westpac and ANZ', it is expecting the BCI to shoulder the cost of running its banking services while maintaining its financial responsibilities and its commercial interests would help the bank to meet these responsibilities.

Teokotai also raised concerns over the bank's potential to miss out on commercial customers and he asks why BCI should pass a 'good and profitable customer to the ANZ or Westpac who were not prepared to assist from the beginning?' He added: 'why should the bank not also finance the car and house of a good customer that has prospered from early development support?'

In addition he said that funds could be invested in offshore money markets for a slightly higher return, and that it 'seems sensible to use these funds to finance a few commercial loans and house mortgages.'

The ADB is a multilateral development finance institution that is dedicated to reducing poverty in Asia and the Pacific region. Established in 1966 ADB is now owned by 59 member countries including the Cook Islands which is the 40th largest shareholder. The ADB is a large and influential organisation providing loans to fund projects and activities in its Asian and Pacific developing member countries as well as furnishing them with several billion US dollars' worth of contracts to procure goods and consulting services. Although the ADB can only offer guidance to its member countries, it is likely that the BCI's decision to go against the ADB and step into the arena of commercial banking will lead to some disagreement between the two parties.