Westpac jettisons Pacific banking

THE Bank of South ­Pacific yesterday bought out Westpac’s banking operations in the Cook Islands, Samoa, Solomon Islands, Tonga and Vanuatu.

Westpac's Rob Whitfield says the sale is part of a move to focus on larger markets. Picture: Liao Lulu.

THE ambitious Papua New Guinea-based Bank of South ­Pacific yesterday bought out Westpac’s banking operations in the Cook Islands, Samoa, Solomon Islands, Tonga and Vanuatu for $125 million.

This leaves ANZ to battle with BSP for market share in what have in the past proved highly ­lucrative markets across the ­Pacific islands.

ANZ also runs banks in the four new countries where BSP is establishing itself, as well as in Solomon Islands where the latter has been operating since 2007.

Rob Whitfield, the chief executive of Westpac Institutional Bank, the Pacific operation’s parent division, said: “Our decision to sell our operations in these nations reflects our desire to increase focus on our growth plans in the larger markets of PNG and Fiji, where we have a strong history.

“These markets support our international aspirations by being closely tied to Asia, Australia and New Zealand and the strong flows of capital, trade, and migration.”

Westpac will continue to compete with BSP and ANZ in the two major Pacific economies, PNG and Fiji. The chairman of BSP, leading PNG businessman ­Kostas ­Constantinou, said the purchases were consistent with the bank’s Pacific expansion strategy launched in 2006.

The assets of BSP now total $7.75 billion, comprised of about 38 per cent of loans and 49 per cent of deposits. Chief executive Robin Fleming said: “This expansion positions BSP to make its mark as the pre-eminent bank in PNG and the South Pacific.”

Mr Constantinou said: “The acquisition brings respected customers in the new jurisdictions, skilled employees and specialised processes and systems.”

He described it as “a milestone transaction not only in the ­corporate development of BSP, not only in the development of PNG as an economic force in the Pacific, but also a positive ­example of Pacific people developing their capabilities in ­regional commercial and ­economic activities”.

In 1993, the operations of BSP — the name through which ­National Australia Bank traded in PNG — were taken over by local firm Credit Corporation.

Then in 2002 it acquired — in the country’s most successful privatisation to date — the PNG government’s 49 per cent stake in PNG Banking Corp, which had been transferred by the ­Commonwealth Bank in 1974, just ­before independence.

Five years ago, BSP bought Colonial National Bank in Fiji from the Commonwealth Bank.