Cook Islands To Get One Stop Banking Option

Mary Swire, Tax-news.com, Hong Kong

15 September 2000

The Outer Cook Islands are soon to be availed of a one stop banking option if a proposed merger between the Cook Islands Development Bank and the Cook Islands Savings Bank goes ahead. The decision to merge the banks was taken by the Cook Islands government in March this year after it was noted that the two operations existed side by side in almost all the islands and greater efficiency with less duplication of effort could be achieved through the pooling of resources.

The merger has moved a step closer to reality this month, with the arrival in Rarotonga of consultants from the firm Vinstar, who are working out of a temporary office in the Ministry of Finance and Economic Management building. Their task is to complete a US$150,000 Asian Development Bank financed plan that would marry the two banks and make them one publicly-owned bank. Vinstar's consultants are working towards a plan which will set up the new bank's capital structure, board of directors, mandate, products and services, policies, information systems and processes. In addition, it will map out a human resource development programme to address a critical shortage of technical skills, particularly in credit appraisal, credit supervision, monitoring, and debt recovery.

A July 1999 report by banking specialist William Gloyne, which discussed the delivery and effectiveness of public sector banking in the Cook Islands, has also added impetus for the rationalisation of the Cook Islands Development Bank and Savings Bank. Mr Gloyne said a single bank carrying out the functions of Savings Bank and Development Bank 'should result in lower overheads and greater administrative efficiency on the one hand, and create a stronger financial unit on the other.'

The Cook Islands Prime Minister is said to be keen to see the new bank take a stronger development focus in its lending operations although exact details of how the new banking entity will work are not yet known. Financial Secretary Kevin Carr has said that the consultancy work on the merger should result in a "finished product" by the beginning of October.

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