Cover Story
ANZ's Pacific Future
Bob Lyon is the biggest banker in the Pacific. He is based in Melbourne, but in November 2002 he shifted ANZ Bank’s regional back office to Fiji, where it now employs 80 people. The president of the Australia Pacific Islands Business Council and Vice President of the Australia Papua New Guinea and Australia Fiji Councils, he is already planning to retire in Fiji, where he has bought a section at Denarau near Nadi.
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Lyon illustrates the enduring commitment of Australian business to the Islands, where companies like his bank, its great rival Westpac (originally the Bank of New South Wales) and a resurgent finance house, Colonial, now owned by Australia’s Commonwealth Bank, have been active for 100 years and more.
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Australian businesses have focused considerable resources on East Asia over the last couple of decades - a region that now buys more than half the country’s total exports. But corporate Australia is also becoming ever more crucial to Island economies as other sources of investment, management and technical expertise dry up. This is apparent from the sales figures. Fiji buys 44 per cent of its imports from Australia, PNG 50 per cent, Solomon Islands 29 per cent, Kiribati 27 per cent, and even Federated States of Micronesia 20 per cent. Few American and European businesspeople find their way into the region, except in a modest way in former colonies or, in France’s case, continuing colonies that receive massive subsidies.
Some significant investments come from Asia, though they tend not to be sustained for long periods. And there are American and European forays into the region. But much of the lower-key investment, especially in the vital tourism industry, comes from Australian and New Zealander owner/operators. The installation and maintenance of equipment like air conditioning continues to be conducted, for instance, by long-established Australian businesses. And Sydney is today as busy an air hub for Island destinations as is Nadi or Auckland.
But Lyon points out that ANZ’s owners naturally seek a return on their equity that is higher than they would enjoy at home. This, together with the average $A4 million bottom-line blow that his bank suffers annually from devaluations in the region, plus the usual demand for ever-improving profits, requires tough discipline in a region where risks from natural disasters and political instability are considerable and growth prospects are limited, except through acquisitions. This latter course has seen ANZ and Westpac constantly vie, in recent years, to take over departing operations such as those of the Bank of Hawaii in the South Pacific, which were bought by ANZ which now has 40 per cent of the regional banking market outside the French colonies.
"We wouldn’t be there if it wasn’t good business," says Lyon. "But you have to know the place, and have empathy with it, or you won’t get past first base. This involves considerable investment in community activities such as sponsoring the South Pacific Games."
Some businesspeople, he says, put money instead in the pockets of Pacific politicians. It may take initial nerve, but it’s a more effective investment to deploy it instead to genuine community activities.
Rowan Callick is Asia-Pacific editor of The Australian Financial Review and a member of Australia’s Foreign Affairs Council.
