Westpac committed to investing in its PNG and Fijian operations

Westpac has pledged to invest in its Pacific banking operations, as the US and Australia attempt to stem the retreat of Western banks from the region.

Westpac says it bank recognises Australian companies play a “strong and active” role in the economies of its Pacific Island neighbours. Picture: John Gass

Westpac has pledged to invest in and grow its Pacific banking operations, across Papua New Guinea and Fiji, amid a joint push by the US and Australian governments to stem the retreat of Western banks from the region.

Westpac Pacific banking managing director Emma Low on Tuesday said the bank recognised Australian companies played a “strong and active” role in the economies of its Pacific Island neighbours.

“We are committed to investing in and growing our Pacific banking operations in PNG and Fiji,” she added, on the sidelines of a Pacific Banking Forum in Brisbane.

“This inaugural gathering of Pacific Island finance sector leaders has identified a number areas for ongoing collaboration between commercial banks, central banks, regulators and governments, to improve economic prosperity across all Pacific Islands.

“These areas include digitising banking systems, implementing digital identity frameworks, uplifting AML/CTF (anti-money laundering/counter terrorism financing) technologies, and modernising payments systems.”

Ms Low said Westpac would work with respective governments on future opportunities in the region.

Her comments come after Westpac last year scrapped a process to sell its Pacific division, following the earlier blocking of a deal by PNG’s competition regulator for a divestment of the unit to Kina Securities.

The banking forum sought to address the issue of US and Australian banks withdrawing or pulling back from the Pacific Islands region. Nauru recently signed a deal with the state-owned Bank of China following the withdrawal of Bendigo and Adelaide Bank, while in 2022 ANZ exited community banking in American Samoa and Guam.

The US and Australian governments are mindful of the Solomon Islands’ security pact with China and are forging closer economic and security ties in the region.

Federal Treasurer Jim Chalmers delivers the keynote address to Australia-US forum on the future of banking in Pacific countries. Picture: Glenn Campbell

Addressing the forum on Tuesday, Treasurer Jim Chalmers warned that the challenges were “clear and confronting” given the most rapid withdrawal of banking services of any region in the world occurring on Australia’s doorstep.

The risk of Western banks pulling out of the region would leave many nations struggling to finance infrastructure projects, increasing the likelihood China could step in to fill the void.”

Assistant Treasurer Stephen Jones told the ABC on Tuesday that banks had to consider their social licence to operate. He said if Pacific Island countries didn’t have a banking system they would lack a modern economy.

ANZ’s chief executive Shayne Elliott on Monday urged Pacific Island countries to harmonise their regulation and financial crimes laws to stem a decline in banking services in the region.

NAB, which doesn’t have branches in the Pacific Islands, was also represented at the forum.

“The conference showcased a collective desire for governments, regulators and banking partners to address the challenges faced by the Pacific Islands region.” said Jonathan Adams, NAB’s transaction banking product executive.

He labelled the forum “a candid and open dialogue” on efforts to identify sustainable ways to improve the accessibility of banking services for Pacific Island nations. Despite NAB’s lack of branches in the region, Mr Adams said it had “a long history of engagement in the Pacific”.