Banking
All Systems Go
A Solid Year For Colonial,Despite Fiji’s Political Shocks
You could call Colonial a relic of Fiji’s colonial past. For the first 110 or so of its 124-year-old presence, the life assurance company — as it began in South Africa and Australia — was a staid entity owned cooperatively by its policy holders.
Then it bought control of the failed government-owned National Bank of Fiji and went head-on against the long entrenched giants of Fiji banking — Australia and New Zealand Banking Group and Westpac Banking Corporation of Australia. It has since gone into health care and funds management.
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But now Colonial is breaking out of Fiji to move into the Pacific Islands in a big way. Last year it began life insurance business in Tuvalu, Tonga and Samoa and intends to begin banking business in Tonga and Samoa and eventually throughout the Pacific Islands.
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“We want to make sure Tuvalu, Tonga and Samoa are settled down, start with life assurance and we’re now looking at health care, health finance products and funds management,” says managing director Simon Swanson. “That will happen this year. Banking may or may not happen this year in Samoa and Tonga. It is terribly important we do it properly. The risk we run is that everyone thinks Colonial is terribly strong in Fiji. In Samoa and Tonga we are not so well known and we need to build ourselves up very firmly.”
There Colonial will be up against the overwhelmingly dominant ANZ group. But Swanson says Colonial’s experience in venturing into the life business in Asia — where they started at number 50 and are now in the top ten — makes him confident on the company’s future as an influential regional banking organization. In Asia, they did their homework. “I think the general approach of ‘what we do in Fiji we will do in Samoa’ almost guarantees you to fail,” Swanson says. “What we need to do is work out exactly what is needed in Samoa and then we will be successful.”
In Fiji, Colonial has 15,000 shareholders, 85,000 policyholders and about 150,000 banking customers. Like every other business in Fiji, Colonial was scarred by the political unrest following a coup in May 2000, but unlike most other businesses it has come out of that experience rather well. In the six months to December 31, 2000 its profit of F$2.43 million was 1 percent up compared to the last half of 1999. “We actually think a 1 percent profit improvement was an exceptional result in view of what happened,” Swanson says.
“What happened last year was interesting, We increased our advertising after May 19 (the day of the coup) and we stayed open all the time. We were the only financial services business to do that, and I think people really appreciated that.”
The Fiji Government has decided to license a commercially operated superannuation fund as competition for the Fiji National Provident Fund, to which most wage earners compulsorily belong. Colonial is interested in that but Swanson says: “The government needs to create a regulatory environment which allows competition. What is at issue is their regulation as it pertains to investment of funds rather than administration.
“What we have is a financial system worth F$5,500 million. It needs to be freed up because there is a lack of equity in the whole South Pacific not just in Fiji.”
