Business
Behind Bank of Hawaii's Change of Direction
They thought they were islanders. Seem they were wrong.
Back in 1994 Richard Dahl, chief operating officer and president of the Bank of Hawaii, landed in Suva to announce the bank's arrival as a sparkling new financial presence in the South Pacific.
"We are an island bank, we are a Pacific bank, in fact we have the name copyrighted: The Bank of the Pacific," he said. "It is certainly time the Bank of Hawaii became part of the scene here."
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Unlike most American banks we have very little interest in expanding on the North American mainland. Our home is an island and we feel very comfortable in dealing with island situation.
"So we think we know island banking, we think we know island people, and we think we will be just as successful as we have been in all the other markets we have been involved in."
In April, the Bank of Hawaii announced that it was abandoning the South Pacific, except for its branches in American Samoa, the only United States territory south of the Equator. It was selling its branches in Papua New Guinea, the Solomon Islands, Vanuatu, Fiji, New Caledonia and French Polynesia.
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Dahl has the job of overseeing the selling of assets in non United States currency areas in Asia and in the United States with the hope of raising US$800 million the bank can reinvest elsewhere.
He's working at the behest of Michael O¹Neil, a new chairman and chief executive hired last year to revive the floundering bank's sagging fortunes. O¹Neil said it was looking at offloading holdings in California, Asia and most of the South Pacific.
But it would keep businesses in the United States-dominated Federated States of Micronesia, Japan and Hawaii. Divestiture is due to be completed by the end of this year.
The bank may have difficulty in dumping some of the South Pacific branches.
It has already sold its shares in banks in Samoa and Tonga and in Suva staff say they¹ve been told the Fiji branch will be taken over by another banking business.
Difficulty could be encountered in the Solomon Islands, where it controls the National Bank of the Solomon Islands. Political instability has left the economy in tatters.
O'Neil has recoiled from any business not able to produce instant fat profits. In Fiji, say local bankers, Bank of Hawaii appears to have not done well. It made some loans and unwittingly took aboard a stream of customers some of whom longer established banks were relieved to see transfer their accounts to it.
Rumours about Bank of Hawaii's future began circulating 18 months before the April announcement.
According to an annual disclosure statement published in April, Bank of Hawaii made a net profit, after tax and extraordinary items of F$149,000 in 2000 compared with F$1.86 million in 1999, a percentage of only 0.08 percent on average assets of F$173 million. Loans dropped from F$109.2 million to F$107.3 million. Provision for bad debts rose from F$4.1 million to F$7.79 million.
Back in 1994 Dahl remarked: "There is room for an American bank and I have to say that not all American banks understand the Pacific. We are unique and have a unique role to play. There is nobody in my judgement that knows anything more about banking in the Pacific Islands."
In landing briefly and then limping from the South Pacific Bank of Hawaii joins Citibank, Barclays and Hong Kong and Shanghai Banking Corporation.
