PAPUA New Guinea-based Bank of South Pacific (BSP) has acquired Westpac Banking Corporation’s operations in Samoa, Cook Islands, Solomon Islands, Vanuatu and Tonga for A $125 million.
In an announcement, BSP chief executive Robin Fleming said the transaction would see the bank make its mark as the pre-eminent bank in Papua New Guinea and the South Pacific.
“(The) BSP chairman and executive will undertake a program of pre-completion visits over the next few months to introduce BSP to customers and staff in those Pacific Island countries and make initial support representations to local regulatory authorities, emphasising that there will be a smooth transition post completion,” he said.
BSP has had an interest in Fiji since 2006 and the Solomon Islands since 2007, with assets of about K16 billion, representing about 38 per cent of loans and 49% of deposits across those markets respectively.
“With a significant presence in PNG, Fiji and Solomon Islands, BSP’s growth potential has always been likely to come from acquisition or line-of-business investment opportunities,” the company said.
The transaction came as BSP pursued a diversification and expansion strategy, seeking out both geographic and business line opportunities of economic size and merit, the group said.
The acquisition brings respected customers in the new jurisdictions, skilled employees and specialised processes and systems, the company said.
It will also position BSP as a leading Pacific regional financial services business, maximising future opportunities from PNG’s growing long-term trade and economic influence in the region.
Westpac Pacific general manager Greg Pawson said Westpac considered it vital that its customers were supported by a bank experienced in operating in smaller markets.
“In reviewing the Group’s position, it was clear that BSP was best placed to maintain a high standard of banking services across these markets and in so doing, continue to support the economies in the region,” he said.
“We believe BSP is well positioned with deep local knowledge to take the great businesses Westpac has built in these countries into the future.”
Completion of the sale is anticipated for mid-2015 and is subject to the parties obtaining necessary statutory, regulatory and third party approvals.
Prior to completion, Westpac will continue to own and manage banking operations in these countries and will continue to meet its customers’ banking needs.
Westpac will also retain its operations in PNG and Fiji said Rob Whitfield, the chief executive of Westpac Institutional Bank, Westpac Pacific’s parent division.
“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,” he said.
“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. Indeed, we continue to see significant opportunities in both Fiji and PNG markets and will continue to invest in expanding our infrastructure and capability in the region.”
Westpac said it did not expect the transaction to have a material impact on its financial position.