By Delly Bagu – EM TV, Port Moresby
In a statement, Westpac announced it had entered into an agreement to sell the operations to the Bank of South Pacific (BSP) for AUS$125 million, approximately K243 million.
Westpac said the sale of the businesses in Samoa, Cook Islands, Solomon Islands, Vanuatu and Tonga would be completed in mid-2015, subject to regulatory approval.
The bank, which will retain its operations in Papua New Guinea and Fiji, said the sale would improve its return on equity in the Pacific region and would not have a material impact on its financial position.
Westpac said it would work with BSP, which has its headquarters in Papua New Guinea and has existing operations in Fiji and the Solomon Islands, to ensure a smooth transition to the new owner for customers.
The deal comes just days before Westpac chief executive Gail Kelly will be replaced by Brian Hartzer, who has cited the growth corridor of Asia as a strategic focus.
Greg Pawson, General Manager of Westpac Pacific, said the PNG and Fiji markets support the Bank’s 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,” Pawson said.
Mr Pawson said that in providing services to this region, it is vital that Pacific Islanders are supported by a bank that is an expert 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.
“We believe BSP is well positioned with deep local knowledge to take the great businesses Westpac has built in these countries into the future,” Mr Pawson said.