PNG Government approves new bank

The PNG Government has approved the Peoples Micro Bank Limited to be a full-fledged commercial bank, Papua New Guinea State Enterprises Minister William Duma says.

“This means the bank and Kumul Consolidated Holdings (KCH) can now implement venture into retail banking and commercialisation of its operations,” he said.

“The commercialisation will result in the creation of a new commercial bank, to be known as the National Banking Corporation of PNG Limited or NBC.

“There is a need for more commercial banks in Papua New Guinea (PNG) to raise competition in the retail banking sector and to service our people.

“This will encourage improved and affordable banking services, since an estimated 80% of the population still do not use any banking facility,” he added.

Duma said the commercialisation process could take up to two years and a K96 million budget had been set aside to help develop “something meaningful for the nation”.

The cost will be met by the Treasury and National Planning Departments. He noted that Bank of PNG approval for NBC licence required the fulfilment of various due diligence and licensing requirements under the legislation governing the operations of commercial banks.

“To kick start the transformation, KCH and the National Development Bank (NDB) will provide commercial support through its advisory team to implement and execute the commercialisation and National Planning Department’s SOE reform programme.

“After a successful application for a banking licence, NDB will transfer its various branches to the bank to give NBC the reach to provide banking and financial services for rural Papua New Guineans.

“The Government recognises that due to the scaling down of operations by Westpac Bank and the ANZ Bank, the Papua New Guineans have not been able to receive efficient and competitive banking services.

“The proposed commercialisation is planned to extend over two years to 2023 with phase one focused on the recruitment of key executives, critical upgrades to core banking system assets, property and buildings.

“Phase 2 will commence later this year.” Duma said the bank would provide 131 new jobs within the first five years, and more than 100 jobs over the following five years.

“The strategy is to negotiate with prospective joint venture partners within three to five years after obtaining a banking licence, to enable the bank to sell down a minimum 51 per cent of the bank to attract the right partners to develop and upskill the bank.

“In the longer term, we envisage new shares to be issued to allow citizens and institutional shareholders to invest and become shareholders in the new bank,” he said.