Australian bank to sell Fiji business to PNG

Updated June 26, 2009 07:44:27

In a two sentence release to the Australian Stock Exchange, Australia's Commonwealth Bank has announced it is in discussions with Papua New Guinea's Bank of South Pacific regarding the sale of its banking and insurance businesses in Fiji. The release says BSP has made an offer and is about to commence due diligence.

Presenter: Geraldine Coutts
Speaker: Syd Yates, Managing Director of Kina group of companies and founding father of the PNG stock exchange

YATES: Bank South Pacific has been very keen to expand throughout the Pacific over the last number of years.

COUTTS: Why would that be?

YATES: Well, they are the biggest bank in Papua New Guinea. They come about in 2002 basically just buying the old Papua New Guinea Banking Corporation, which in fact was a subsidiary of the Commonwealth Bank in the old days and it was actually owned by the government. It came about in 2002 and in 2004 they bought the Westpac operations in Niue and then 2006, they also bought the Habib operations banking in Fiji and even though it was only a small bank with two branches, then in 2007 they bought the National Bank of Solomon Islands, which was the biggest bank there. So they have had this ambition to expand throughout the Pacific for sometime.

COUTTS: Now, why is that, because it's been an area where most banks have stayed away from, as we know there has only been a few in the region for a very long time. So why the expansionism program now?

YATES: I think a couple of the main things, that they have probably close to 60 to 70 banking operations in Papua New Guinea, so they probably cannot get too much bigger there. So they are looking at expanding in the Pacific. I think and also they are comfortable with the banks operations throughout the Pacific. They are Melanesian, so they are very used to the way of life and how things operate in those countries and so they probably feel quite comfortable with it.

COUTTS: And so it is one of the major partners in the Pacific now, the Bank of the South Pacific?

YATES: Well, it would be I imagine, if you take out the two, you have still got Westpac and ANZ Banks that have probably a very big presence right throughout the region as well. So they would probably be coming up there along number three there.

COUTTS: And what about the insurance holdings, is that likely to go as part of the sale, lock, stock and barrel?

YATES: Oh, as I said, I did not know too much about it, but I would imagine they would probably buy those complete operations so they could go into more of the financial services as well.

COUTTS: Well, just very briefly Syd, because we've got to move on. The PNG Stock Exchange is a boom to the industry and you have had a hand in that?

YATES: Yes we have, it's been going I think ten years now and it's we've had a great growth and it's even though we've been affected like all the other operations, stock markets around the world, we're still holding our own.