Westpac yesterday announced it had entered into an agreement to sell its banking operations in Samoa, the Cook Islands, Solomon Islands, Vanuatu and Tonga.
The Bank of South Pacific Limited (BSP) will acquire the businesses for $125 million.
Westpac will retain its operations in its largest Pacific markets of Fiji and Papua New Guinea (PNG) as both the longest serving bank in Fiji, for 113 years, and the first bank in PNG.
Completion of the sale is expected to occur in mid-2015 and is subject to the parties obtaining necessary statutory, regulatory and third-party approvals.
Prior to completion, Westpac will continue to own and manage banking operations in these countries and will continue to meet its customers’ banking needs, the bank said.
Following completion, Westpac will work to ensure continuity of services to customers and a smooth transition of operations in these countries to BSP - the largest Pacific-originated bank, with operations in PNG, Fiji and Solomon Islands and headquarters in PNG, Westpac added.
“Our decision to sell our operations in these nations reflects our desire to increase focus on our growth plans in the larger markets of PNG and Fiji, where we have a strong history,” said Rob Whitfield, chief executive of Westpac Institutional Bank, Westpac Pacific’s parent division.
“These markets support our 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,” Mr Whitfield said.
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, Westpac Pacific general manager Greg Pawson added.
“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,” he said.
Westpac said the transaction will not have a material impact on the group’s financial position.