Alan Bollard, governor of the Reserve bank of New Zealand, again called on banks to pass on cuts in wholesale interest rates to customers, saying they had profited from the good times and should not shrink from playing their part during the tough times. Bollard said banks should not underestimate the level of "corporate anger" at banks over business interest rates being held up. "The banks also have a key role in assisting the New Zealand economy," Bollard said in a speech to a jobs summit in Auckland. "They face a big challenge operating at his time of fragile international markets, and it is completely appropriate that they should now be very conservative," Bollard said."However, they have profited from good times in this economy, and we expect them to be there for the tough times too," he said.Bollard said that means they need to keep seeking international funding (as has happened in Australia) and parent support; use the "support mechanisms" put in place by the New Zealand government, such as government guarantees; keep passing on wholesale interest rate cuts and keep lending on sensible proposals.He said that banks need to "avoid onerous conditions on lending that have the same effect as a credit crunch."In a departure from his speech notes Bollard advised banks that they "don't underestimate the amount of corporate anger out there currently with regards to the banking system."The extent to which banks are withholding reduced funding costs in the form of inflated interest rate levels is debateable. The RBNZ measures of base business rates and the anecdotal feedback from businesses both suggest that only a third of the 475 basis points of the RBNZ's cuts to the official cash rate cuts have been passed on to businesses using overdrafts or other such facilities for funding. Less than third of the rate cuts have been passed on to credit card borrowers.Banks would argue that business loans are riskier in a deep recession and have already reported a sharp rise in bad debts from businesses. RBNZ financial aggregates show banks increased total lending to businesses, farmers and households by NZ$640 million to NZ$299 billion in January 2009 from December, though most of the increase went to households and farmers. Business lending fell by NZ$187 million to NZ$80.0 billion.Interest.co.nz