Banking
PNG's Largest Bank Goes The Privatisation Route
Now BSP holds majority shares
The finance and banking landscape in Papua New Guinea is expected to change following Bank South Pacific's (BSP) purchase of the country's largest commercial bank, Papua New Guinea Banking Corporation (PNGBC). PNGBC has become the first state-owned entity to be privatised under the Government's privatisation programme. And BSP now holds majority shares in the bank.
PNGBC would now merge with BSP following a successful Kina 175 million bid. The details of the merger have yet to be publicised. But when announcing the merger between the two banks, Privatisation Minister, Vincent Auali said the new entity would employ around 2300 staff and operate 45 branches and agencies as well as provide world-class electronic banking and EFTPOS service.
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Auali said: "The creation of a strong PNG-owned financial institution with a commitment to the long-term development of the country is a direct outcome of the government's privatisation policy."
BSP was one of four bidders for a majority stake in PNGBC. The other three contenders were Westpac, ANZ, and a New Zealand bank.
PNGBC has 84 branches and agencies comprising over 1900 staff throughout the country. The bank's extensive network delivers banking services, which include deposit, lending, international services and electronic banking throughout the country. The PNGBC also offers finance company services through its wholly owned subsidiary, Nambawan Finance Limited. The services include commercial leasing, mortgage finance and money market facilities.
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BSP commenced operations in Port Moresby on May 1, 1957, as a branch of the National Bank of Australasia Limited. Operations were later expanded to the major centres. It was incorporated as Bank South Pacific Limited, a wholly owned subsidiary of the Australian parent, on October 1, 1974 with a paid-up capital of Kina 2 million.
In April, 1980 and August, 1981, a total of 300,000 ordinary fully paid shares of one Kina were issued to the public in Papua New Guinea, thus increasing the paid-up capital to 2,300,000 fully paid one Kina shares. On August 24, 1993, the nationally owned company, National Investment Holdings Limited (NIHL), acquired the 87 percent shareholding held by National Australia Bank.
On October 25, 1993, 100 percent ownership of the Bank was achieved by NIHL, which later changed its name to BSP Holdings Limited.
In December 1995, BSP Holdings Limited completed a successful capital raising of Kina 2.7 million by way of a Convertible Note Issue. The holding company took up an additional 2.7 million fully paid shares of Kina 1 in Bank South Pacific Limited, increasing the issued capital to Kina 5 million. At that time Motor Vehicles Insurance (PNG) Trust (now incorporated as "Motor Vehicles Insurance Limited") acquired 2,130,000 shares or a 22.42 percent shareholding in BSP Holdings Limited to become the second largest shareholder behind Credit Corporation (PNG) Ltd, with 24.89 percent. In October 1998, BSP Holdings Limited raised Kina 12.9 million through a Rights Issue of shares at three Kina. During December 1998, BSP Holdings Limited went into voluntary liquidation and its shareholders now hold shares in Bank South Pacific Limited.
