Question marks over BNZ sellout

THE Bank of New Zealand is withdrawing from Fiji and Western Samoa, and its interests in Tonga now have a question mark over them, The BNZ’s decision to sell its operations in Fiji and Apia to the ANZ Banking Group Ltd of Melbourne is yet another sign of New Zealand’s crippling economic problems, and the growing dominance of Australia in the commercial affairs of the South Pacific.

BNZ is to sell its entire operation in Fiji, and its 50 per cent share in the Bank of Western Samoa (of which the

other partner is the Western Samoa Gov ernment). In ques tion also is BNZ’s holding in the Bank of Tonga, where it has as partners the

Tongan Govern

ment, Westpac and Bank of Hawaii.

Given Westpac’s pre sence, it would seem unlikely that ANZ a major Australian competitor would be welcomed as

BNZ’s replacement,

and the problem may resolve itself by the other three each in creasing their share.

While the Fiji move has govern ment approval, the situation in Western Samoa is not so clear-cut. Reports say the problem is with the Bank of Western Samoa Ordinace of 1959, the year of the bank’s establishment.

Section 40 of that ordinance says the

Western Samoan Government has a pre emptive right to the BNZ shares if they are offered for sale. It also seems that government officials in Apia are upset because the sale was apparently announced before the BNZ took steps to seek government approval for the move, The sale of the Fiji operation has a poignant twist: BNZ was the first bank set up in the Fiji Islands back in 1876.

That was four years ahead of the Union Bank, which opened an office at Levuka in 1880, that being another twist the Union Bank was a forbear of the ANZ.

BNZ general manager Barry Muntz indicated the switch came after the ANZ took the initiative and made an approach to BNZ head office in Wellington. “It’s a commercial deal, made by the board in Wellington. There is no political situa tion in this it’s just a straight-out com mercial deal.”

But he could not disguise his feelings about the New Zealand bank deciding to quit the region: “We’re upset the BNZ name will disappear from Fiji. I was quite stunned that this should happen. I took it very badly, but I can see the commercial reason for it.”

A statement for ANZ said the purch ase price had not been finalised and would depend on a final audit and other clearances.

The BNZ has been struggling for more than a year since it was revealed that its bad debt exposures in its home market amounted to well over NZ$l bil lion (US$59l million) following the large number of high-flying New Zealand companies which collapsed as a result of the 1987 stock market rout. That has been exacerbated by the persistent eco nomic recession which has plagued New Zealand, making business activity in that country difficult for bankers. BNZ has recently closed four international offices and has also wound down its activities in New York, London, Tokyo and Hong Kong.

The takeover makes ANZ the largest trading bank in Fiji, with 45 per cent of the market, it will overtake Westpac’s op eration.

Approval from the sale was obtained from the Reserve Bank of Fiji just hours before the announcement was made an announcement which took most of Suva’s business community by surprise.

The move was conditional on assurances being given by the ANZ to both the gov ernment and the Reserve Bank that there would be no redundancies. BNZ employs about 500 people in Fiji, the ANZ 346. The merger was expected to be completed by the end of March.

BNZ Suva: sold to ANZ.

The merger will still leave the people in Fiji with plenty of banking choice apart from Westpac and the ANZ, they have the Bank of Baroda and the gov ernment-owned National Bank of Fiji.

The withdrawal from the Bank of Western Samoa also ends a long associa tion with the finance world in Apia.

Western Samoa was administered be tween 1914 and 1962 as first a League of Nations mandate, then a United Na tions Trusteeship. The Bank of Western Samoa was established in 1959, and was joined in 1977 by the Pacific Commercial Bank which was a joint venture by West pac and the Bank of Hawaii. Bank of Western Samoa has one branch and 14 agencies, and employs 280 people.

ANZ’s Pacific Islands general mana ger, Lance Cooke, said the move “places us in a position of being a serious chal lenger to Westpac’s supremacy in the South Pacific.” We have got very close to them. The deal took place just weeks before Cooke was due to leave as ANZ’s general manager in India.

“We are already heavily committed in Fiji, Vanuatu, the Solomon Islands, the Cook Islands and Papua New Guinea,” he said. “This proposed acquisition rein forces our commitment toward further development of the economies of Fiji and Western Samoa.”

ANZ, once the merger is complete, will provide financial services at more than 150 locations, with a mixture of branches, service centres and agencies.

Some branch consolidation may occur where both BNZ and ANZ have offices, but the new owner said no community would lose its current service. □

ANZ Bank