Bank of South Pacific buys up entities in Fiji
Updated
Papua New Guinea's Bank South Pacific has announced its much-expected plans to expand. It has signed an agreement with Australia's Commonwealth Bank to buy Colonial National Bank in Fiji, as well as a number of other associated companies, which account for about 20 per cent of Fiji's banking sector.
The bank already has a stake in Niue and Solomon Islands, but if approved by the central bank this latest deal will represent the bank's biggest acquisiton to date.
Presenter: Kate McPherson
Speaker: Ian Clyne, Managing Director and CEO of the Bank South Pacific
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CLYNE: Bank South Pacific and the Commonwealth Bank of Australia have basically agreed for BSP to purchase Colonial Group in Fiji. So, we have agreed terms and the whole sale is subject to Reserve Bank of Fiji and Bank of Papua New Guinea's final approval.
MCPHERSON: And are you confident that the Reserve Bank of Fiji will sign off on this too?
CLYNE: Well, BSP already purchased a small bank in Fiji a few years ago, so we do have an operation in Fiji and that we are there for a licensed bank. So one would hope that this transaction would be approved.
MCPHERSON: So what exactly will BSP be acquiring?
CLYNE: BSP is acquiring the Colonial National Bank and Colonial Life. Colonial National bank is 20 per cent of the banking market in Fiji. It has 17 branches and combined with BSP's current two branches will give us a very large network, about 20 per cent of the banking sector in Fiji.
MCPHERSON: Twenty per cent? So this is quite a significant transaction then?
CLYNE: For BSP, this is probably the most significant acquisition we have undertaken since the merger some years ago with the PNG Banking Corporation. So this is part of our Pacific strategy and clearly Fiji is the second largest market in the Pacific, so we believe this is an excellent opportunity for us to really expand in Fiji and obviously further into the Pacific.
MCPHERSON: In this economic climate, why is the Bank of South Pacific so confident about this transaction?
CLYNE: Well, in difficult times there are always opportunities of course. Historically, the Australian banks have done very, very well in Fiji and they continue to do so: ANZ and Westpac. Perhaps Colonial has not had as much focus of building up their corporate side of the business. They tend to be more a retail organisation. BSP is 55 per cent of the banking market in Papua New Guinea, ANZ is 25 per cent and Westpac is 20 per cent, so we are by far the dominant player and therefore we need to expand further in the Pacific, because clearly for competitive reasons there is a limit on how much more growth we would have in Papua New Guinea.
MCPHERSON: So you have obviously studied Fiji's economy closely before going ahead with this transaction and you're confident that it is a good deal for you?
CLYNE: I think it has been a very good deal both for BSP and CBA. I think the transaction was conducted very, very professionally and both parties I think have a good deal. In terms of Fiji economy and the global economy, obviously everything is cyclic. Clearly the global crisis and other issues do impact markets in the Pacific, but given what we have acquired or hopefully acquired, we believe this forms an absolute excellent base to build on as the economic cycle improves.