Bank South Pacific interested in buying Colonial National Bank in Fiji

Bank South Pacific (BSP) has indicated an interest in buying Colonial National Bank's (CNB) operations in Fiji. This occurs although CNB was not actively looking for a buyer.

BSP is a Papua New Guinea owned commercial bank which first made inroads in Fiji by buying Habib Bank's Fiji operations. It is said to be the largest commercial bank in Papua New Guinea.

In recent years, BSP has undertaken an expansion into the Pacific region. It acquired the National Bank of the Solomon Islands in 2007 and also has operations in Niue.

Colonial National Bank is owned by Commonwealth Bank of Australia.

The necessary due diligence process is being undertaken where the business will be analysed and a review made of the accounts, records and processes of CNB by BSP. This process will take about four to six weeks.

Bank acquisitions in Fiji require Reserve Bank of Fiji approval.

No Change in Westpac Interest Rates

Westpac Banking Corporation's interest rates (effective 2.6.09) have been posted on this blog.

One can note that there has been no change to the bank's rates from those that were published a month earlier.

Of the three banks, ANZ, Westpac and Colonial National Bank (CNB), CNB has the lowest business banking index rate and lowest housing loan interest rates.

Housing loan interest rates are around the same levels for the other two banks, ANZ and Westpac.

With regard to deposit rates, Westpac and CNB pay similar interest rates for shorter term deposits while ANZ pays slightly lower than them. Deposit rates for the three banks converge at around 4% for terms from 2 years.

We do not have information for the two smaller banks, Bank South Pacific, and Bank of Baroda.

Note : For investment advice and portfolio management, pls call our office on telephone (679) 3342719 or email info@gilbert.com.fj.

Bank South Pacific Clarification

The figures published by Bank South Pacific in the Fiji Times last Saturday, 14 April 2007, was apparently for the entire Bank South Pacific Group (which includes its global operations as well as Fiji).

Therefore, the figures reported are correct i.e. that net profit before tax for 2006 for the whole Bank South Pacific Group was F$62.0 million and F$55.1 million for 2005.

This is a new practice that banks in Fiji now publish their global financial results instead of that of their Fiji operations only.

After the controversy of the high profits recorded by banks in Fiji (refer to ANZ and Westpac performance reported on this blog earlier and in the local newspapers), I have found that those institutions' whose performance was to be published last April for their December 2006 results, have not published them. These include some of the non-bank deposit taking institutions.

The whole intention of the Reserve Bank's policy to require publication of their Fiji results was that it was more appropriate for educating and informing the Fiji public about how their banks and other deposit taking institutions have performed over the most recent financial year with comparative data provided for the year earlier.

Previously banks used to publish their global results. That publication meant very little for Fiji users and readers of financial information. This was changed after passage of the current Banking Act in 1995 and the implementation of a disclosure policy for banks and other deposit-taking institutions which require publication of the financial results for their Fiji operations.

Is the publication of global results going to be a new practice for Fiji? Or is someone trying to hide something particularly after the controversy of banks benefiting from Reserve Bank's high interest rates policy?