Page 18 - IB December 2023

Banking Banking

WESTPAC STAYS, SO WHAT’S NEXT?

By Samantha Magick
Westpac’s October announcement that it no longer planned
to sell its remaining businesses in Papua New Guinea and
Fiji, and its statement to the Australian Stock Exchange that
it would increase investment in its subsidiaries, was warmly
welcomed by governments and the business community in
those countries.
Westpac first announced its plan to sell its Pacific businesses
in December 2020, but an AU$420 million attempt by Kina
Securities to buy the operations was stymied by PNG’s
Independent Consumer and Competition Commission, which
said it would “limit national economic progress.”
BRED Banque Populaire, the Fiji National Provident Fund,
NasFund and Credit Corp had also expressed interest in the
entities. But nothing came to fruition, leading the bank to
close the sales process.
On a recent visit to Fiji, Westpac Senior Economist, Justin
Smirk said the message to clients has been that the bank has a
genuine commitment to the region.
“It's now got a focus of actually investing and growth,”
Smirk told Islands Business. “We're now targeting to try
and renew a lot of the relationships we had and rebuild the
confidence in the industry. We see great opportunities within
Fiji, and it’s a real commitment that we're here to stay. It's a
big shift from what was being talked about a couple of years
ago.”
He says Westpac changed its mind about the sale for two Shane Smith
reasons.
“Of course, the difficulty in selling the business to begin
with, so that's the genuine, honest answer. The second one is
Anthony Miller. Now the Pacific bank reports to him, he was
very, very confident and believed in the business.” the standards we set, and also great for Fiji.”
The decision has been warmly received by figures such He continues: “A lot of trade is underpinned by bank-to-
as Reserve of Fiji Bank Governor, Ariff Ali, who says: “As bank letters of credit, and without a strong credit rating,
somebody who's responsible for making sure that there’s those letters of credit are not accepted. So, having a second
financial stability, I think the fact that Westpac is staying is AA rated bank in Fiji means local corporates and commercial
a good thing for Fiji. They’re a bank that has a very strong businesses have more choice when it comes to facilitating
credit rating. Businesses and corporates want banks that their trade flows.”
provide services on par with international standards. Executive Director at the Australia-Papua New Guinea
“I think the other important thing is that they have been Business Council, the Australia-Fiji Business Council, and the
here for over 100 years, they have strong capital, so they can Australia-Pacific Islands Business Council, Frank Yourn says
contribute to the growth of the Fijian economy, and to me, it's Australian businesses will also benefit.
something that is positive and brings about confidence,“ he “My view is that businesses tend to follow their banking
told Islands Business. interests into markets,” Yourn adds, saying that the departure
The only other AA rated bank in Fiji, is ANZ. That bank’s of Westpac from a number of other Pacific countries (Samoa,
Country Head, Rabih Yazbek says Westpac’s decision is good Tonga, Cook Islands, Solomon Islands and Vanuatu) in 2015/16
for the economy. was disappointing.
“They are a fellow Australian bank that is held to the “There's a lot of business that banks can do in the Pacific.
highest standards. So we applaud their decision, and at the There's lots of big donor contracts floating around in the
end of the day, if you are realistic about any industry you're Pacific, I mean, Australia, on its own has got a AU$4 billion
in, you accept that competition is good. And having another infrastructure financing facility in the Pacific, and that will be
Australian bank in the market is fantastic for competition and predominantly serviced through Australian banks. Westpac, of

18 Islands Business, December 2023