Business and Development

World banks are scrambling for a place in the Islands

By Ken Mcgregor

Investors who judge the economic possibilities of a country by the number of banks in it should take a look at the Islands.

British, Australian, French and American banks have paid more at tention to the Islands over the past 12 months than they have done over the past 12 years. They are scramb ling for a place where forecasts of big increases in tourism and secondary and primary industry have been made.

Several banks, such as New York’s First National City Bank (with big interests in Australia), the British based Australia and New Zealand Bank Ltd. and the US’s expansive Bank of Hawaii, have made individual and private assessments of French Polynesia, American Samoa, Fiji, the Solomons and the New Hebrides.

These and other banks’ interests should be beneficial because more banks must mean more competition.

Competition

New Caledonia has received a competitor to its longtime mono polist, the Bank of Indo-China; French Polynesia will in August wel come a competitor with its branch of the Bank of Indo-China; the New Hebrides will receive its third bank later this year; and American Samoa’s often-criticised government-run bank will be taken over in September by a progressive and wealthy overseas banking group.

Briefly, development over the past year is this: • Australia’s Bank of New South Wales, for many years in Fiji and New Guinea, has begun operations on Nauru. The tiny republic is a prize because of its phosphate and its current moves to diversify its eco nomy (the football pools-hotel pro ject, for example, and its Si million shipping operations). • The ANZ Bank has announced that it will open in Vila, New Hebrides, “later this year”.

ANZ made its own survey of the Hebrides and will move in largely

because it believes—that a tourism industry will develop, exports to Aus tralia will increase many times and Australia will take much of the timber from a French Societe Rougier development on the southern island of Erromanga. • In tourist-hopeful Rarotonga, Cook Islands, where a jet airstrip is currently being built, the National Bank of New Zealand will open by 1970. • France’s Banque Nationale de Paris, also a leading European bank, opened in Noumea, New Caledonia, in March.

This move should be extremely profitable because the territory has massive nickel reserves and it will also have at least one other combine besides the longtime Societe le Nickel exploiting these reserves. Nickel miners plan to spend more than 5U5350,000,000 on development. • The Honolulu-based Bank of Hawaii, paying more interest to the Islands than all the other banks involved in this area, will take a significant shareholding in a new bank, Banque de Tahiti, to open in Papeete in either July or August. (Banque de Tahiti will break the monopoly of the Bank of Indo-China the only bank in French Polynesia since 1905— PIM, Dec., 1968 p. 129).

Directors of the Bank of Hawaii feel the economic potential of French Polynesia is based on—tourism (there is nearly SUS 12,000,000 invested by Americans in hotels and tourism already), exports (of food stuffs and manufactured goods to Hawaii and the US) and real estate (there are profitable investments to be made throughout the dozens of islands particularly the better known Society group).

The Bank of Hawaii’s Tahiti move has already resulted in improved local service by the Bank of Indo- China.

Cheques have been cashed more quickly, loans that had before been refused have now been granted, tellers are said to be more attentive and the bank’s Papeete centre has been brightened up.

French Polynesians welcome the competition. • On September 1, the Bank of Hawaii is also expected to take over the young Bank of American Samoa, using initially the Samoan bank’s current cramped offices near the Governor’s premises in down town Pago Pago.

Tourist boom?

Honolulu views are that tourism could really boom in American Samoa provided the territory’s only hotel can have the number of its rooms doubled and that other hotels are built on the main island of Tutuila.

If the Bank of Hawaii can revitalise the ailing American Samoan Development Corporation, of which the Bank of American Samoa is the major shareholder, the small American territory should be well pleased with the newcomer.

The US Secretary of the Interior, Mr, W. J. Hickel, has approved the sale of the Samoan bank to the Hawaiian bank and the Samoan Legislature is expected to agree in July.

The Bank of American Samoa

would remain, but as a develop ment body without trading or com mercial powers. Its function would be to provide loans for the economic development of the territory.

In Pago Pago the locals are look ing forward to the Hawaii-Samoa takeover. Most of them feel that the Bank of American Samoa, while it hasn’t lost money, has not done an adequate job—mainly because it is government-run.

Hopes are that when the Bank of Hawaii sets up in Pago Pago the much-delayed SUS2i million loan for a 100-room extension to the ter ritory’s Pago Pago Intercontinental Hotel will be approved and building will start before 1970.

Both Pan American Airways, parent company of Intercontinental Hotels, and the Bank of Hawaii, would put up about SUS4OO,OOO each of the loan and US government agencies the rest.

But gaining the loan and having the hotel cover its SUSBOO,OOO losses would be easy for the Bank of Hawaii compared to its task of mak ing the American Samoan Develop ment Corporation profitable.

ASDC, which made a loss of $186,127 last year, is partly Samoan owned and mostly US-controlled and the fact that Samoans have con tributed some $300,000 to this US sponsored company has left a nasty taste in many mouths in American Samoa. It’s unlikely Samoans will contribute again to a similar dev elopment company.

With initiative, the Bank of Hawaii could do much with the tourist potential in both French Polynesia and the US Trust Territory; the going in a little place like Samoa could be tougher.

Mr. Clifton B. Terry, president of the Bank of Hawaii, who was in Papeete in June talking with French shareholders of the Banque de Tahiti, says he feels the South Pacific will see “great changes” over the next 10 years.

Because of this his bank has set up branches on Guam and is ex tending its influence in the US Trust Territory.

American thinking is that the big money in the next five years will be spent on upgrading the widely-spaced atolls and islands of the Marshalls, Carolines and Marianas, rather than in American Samoa, which had its share of big funds in the early 1960’5.

Meanwhile there is pressure on Washington to take America’s ex ternal territories out of the control of the Department of the Interior and hand them to the Department of Health, Education and Works.