Bank of South Pacific
Encyclopedia
Bank South Pacific is Papua New Guinea
’s largest bank, with 35 branches throughout the country and in operation in 4 countries. BSP currently services over 650,000 business banking customers throughout the Pacific. As of 31 December 2010 BSP has total assets valued at K10 billion and market capitalisation at K3.78 billion.
. As independence approached for Papua New Guinea (PNG), the incoming government made known its desire that all banks in PNG be locally incorporated, rather than branches of a foreign parent. In response, National Australia Bank
(NAB) incorporated its operations in 1974. Then the government encouraged the bank to sell equity to local citizens. BSP conducted IPOS in 1980 and 1981, with the result that local citizens came to hold 13% of the bank's shares. Then government decided to acquire control of BSP. In 1993, National Investment Holdings Limited (NIHL) acquired first NAB’s 87% shareholding, and then the 13% of the shares in the hands of the public, giving it 100% ownership of BSP. In 1995the government decided to increase the bank's capital base, which it achieved by selling a 25% stake to Credit Corporation (PNG) and a 22% stake to Motor Vehicles Insurance (PNG) Trust (now incorporated as Motor Vehicles Insurance Limited).
Actually, the bank's history traces back even further than 1957, though the bank doesn't mention this. In 1916, Commonwealth Bank, the Australian government-owned bank, established a branch in Rabaul
and agencies in other towns, to support the banking needs of the Australian Army
and its troops who had taken control of the former German colony of New Guinea
. In time, this operation became a full-fledged commercial banking operation. Then in 1974, Commonwealth Bank withdrew from PNG by transferring its operations to the new government, which gave the bank the name "Papua New Guinea Banking Corporation" (PNGBC). Unfortunately, PNGBC ran into problems so in 2002, BSP acquired the government’s 49% stake in PNGBC in return for giving the government a 25% stake in BSP. Between 2002 and 2008 BSP and PNGBC merged.
Since 2004, BSP has pursued a strategy of expanding in the South Pacific. It first acquired Westpac
’s branch in Niue
, which was the only bank of any kind on the island. Westpac had established the branch in 1988 but was interested in reducing some of its operations in the area. Two years later, in 2006, BSP made two further acquisitions. It bought National Bank of Solomon Islands
from the government of the Solomon Islands
, and it acquired Habib Bank (Fiji), which had begun in 1991 as a branch of HBL Pakistan. Most recently, in December 2009, BSP wholly acquired Colonial National Bank
from Commonwealth Bank, thereby further increasing its presence in Fiji.
Papua New Guinea
Papua New Guinea , officially the Independent State of Papua New Guinea, is a country in Oceania, occupying the eastern half of the island of New Guinea and numerous offshore islands...
’s largest bank, with 35 branches throughout the country and in operation in 4 countries. BSP currently services over 650,000 business banking customers throughout the Pacific. As of 31 December 2010 BSP has total assets valued at K10 billion and market capitalisation at K3.78 billion.
History
The bank traces its history back to 1 May 1957 when National Bank of Australasia established a branch in Port MoresbyPort Moresby
Port Moresby , or Pot Mosbi in Tok Pisin, is the capital and largest city of Papua New Guinea . It is located on the shores of the Gulf of Papua, on the southeastern coast of the island of New Guinea, which made it a prime objective for conquest by the Imperial Japanese forces during 1942–43...
. As independence approached for Papua New Guinea (PNG), the incoming government made known its desire that all banks in PNG be locally incorporated, rather than branches of a foreign parent. In response, National Australia Bank
National Australia Bank
National Australia Bank is one of the four largest financial institutions in Australia in terms of market capitalisation and customers. NAB is ranked 17th largest bank in the world measured by market capitalisation...
(NAB) incorporated its operations in 1974. Then the government encouraged the bank to sell equity to local citizens. BSP conducted IPOS in 1980 and 1981, with the result that local citizens came to hold 13% of the bank's shares. Then government decided to acquire control of BSP. In 1993, National Investment Holdings Limited (NIHL) acquired first NAB’s 87% shareholding, and then the 13% of the shares in the hands of the public, giving it 100% ownership of BSP. In 1995the government decided to increase the bank's capital base, which it achieved by selling a 25% stake to Credit Corporation (PNG) and a 22% stake to Motor Vehicles Insurance (PNG) Trust (now incorporated as Motor Vehicles Insurance Limited).
Actually, the bank's history traces back even further than 1957, though the bank doesn't mention this. In 1916, Commonwealth Bank, the Australian government-owned bank, established a branch in Rabaul
Rabaul
Rabaul is a township in East New Britain province, Papua New Guinea. The town was the provincial capital and most important settlement in the province until it was destroyed in 1994 by falling ash of a volcanic eruption. During the eruption, ash was sent thousands of metres into the air and the...
and agencies in other towns, to support the banking needs of the Australian Army
Australian Army
The Australian Army is Australia's military land force. It is part of the Australian Defence Force along with the Royal Australian Navy and the Royal Australian Air Force. While the Chief of Defence commands the Australian Defence Force , the Army is commanded by the Chief of Army...
and its troops who had taken control of the former German colony of New Guinea
New Guinea
New Guinea is the world's second largest island, after Greenland, covering a land area of 786,000 km2. Located in the southwest Pacific Ocean, it lies geographically to the east of the Malay Archipelago, with which it is sometimes included as part of a greater Indo-Australian Archipelago...
. In time, this operation became a full-fledged commercial banking operation. Then in 1974, Commonwealth Bank withdrew from PNG by transferring its operations to the new government, which gave the bank the name "Papua New Guinea Banking Corporation" (PNGBC). Unfortunately, PNGBC ran into problems so in 2002, BSP acquired the government’s 49% stake in PNGBC in return for giving the government a 25% stake in BSP. Between 2002 and 2008 BSP and PNGBC merged.
Since 2004, BSP has pursued a strategy of expanding in the South Pacific. It first acquired Westpac
Westpac
Westpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
’s branch in Niue
Niue
Niue , is an island country in the South Pacific Ocean. It is commonly known as the "Rock of Polynesia", and inhabitants of the island call it "the Rock" for short. Niue is northeast of New Zealand in a triangle between Tonga to the southwest, the Samoas to the northwest, and the Cook Islands to...
, which was the only bank of any kind on the island. Westpac had established the branch in 1988 but was interested in reducing some of its operations in the area. Two years later, in 2006, BSP made two further acquisitions. It bought National Bank of Solomon Islands
National Bank of Solomon Islands
National Bank of Solomon Islands has the largest network of offices in the Islands. Although the Bank overall is profitable, the offices outside Honiara, the capital, are running at a loss. On 27 April 2007, Bank South Pacific made a formal announcement to the Port Moresby stock exchange that it...
from the government of the Solomon Islands
Solomon Islands
Solomon Islands is a sovereign state in Oceania, east of Papua New Guinea, consisting of nearly one thousand islands. It covers a land mass of . The capital, Honiara, is located on the island of Guadalcanal...
, and it acquired Habib Bank (Fiji), which had begun in 1991 as a branch of HBL Pakistan. Most recently, in December 2009, BSP wholly acquired Colonial National Bank
Colonial National Bank
The full name of the bank is National Bank of Fiji trading as Colonial National Bank. The bank is as of December 2009 a subsidiary of Bank South Pacific and has the largest branch network in Fiji...
from Commonwealth Bank, thereby further increasing its presence in Fiji.
Source
- Tschoegl, A. E. 2005. Foreign Banks in the Pacific: A Note. Journal of Pacific History 40 (2): 223-235.