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Westpac cancels pacific banking business sale after regulatory hurdles

Westpac’s decision to keep its Fiji and Papua New Guinea operations

Westpac, one of Australia’s largest banks, announced on Wednesday that it had scrapped the sale of its banking businesses in Fiji and Papua New Guinea, ending a years-long process that faced multiple regulatory challenges. The bank said it had decided to retain and invest in its pacific operations, which have been showing growth and recovery after the COVID-19 pandemic.

Westpac had agreed to sell its Fiji and Papua New Guinea businesses to Kina Securities, a Papua New Guinea-based financial services company, for A$420 million ($264.77 million) in 2021. However, the deal was blocked by the Papua New Guinea regulator, which said it would not approve the transfer of Westpac’s banking licence to Kina.

The regulator cited concerns over the potential impact of the deal on competition, financial inclusion, and stability in the country’s banking sector. The regulator also said it was not satisfied with Kina’s plans to address the needs of Westpac’s customers and staff.

Westpac said it had explored various options to divest its pacific businesses, but none of them met its expectations or requirements. The bank said it had received strong interest from several parties, but none of them were able to secure the necessary regulatory approvals.

Westpac cancels pacific banking business sale after regulatory hurdles

Westpac’s new strategy for its pacific business

Westpac said it had decided to keep and grow its pacific business, which has been operating in Fiji and Papua New Guinea for over 100 years. The bank said it had a loyal customer base, a strong market position, and a dedicated team of employees in both countries.

Westpac said it would launch a new brand campaign in the coming months to improve its standing and reputation in the local markets. The bank said it would also invest in digital capabilities, products, and services to enhance its customer experience and satisfaction.

Anthony Miller, CEO of Westpac business and wealth division, said in a statement that the bank was committed to supporting its customers and communities in Fiji and Papua New Guinea. He said the bank would leverage its expertise and resources to help them achieve their financial goals and aspirations.

“We are excited about the future of our pacific business and the opportunities it presents for our customers, employees, and shareholders,” Miller said.

Westpac’s broader divestment plan

Westpac’s decision to cancel the sale of its pacific business comes as part of its broader strategy to simplify its operations and focus on its core markets in Australia and New Zealand. The bank has been selling or winding down some of its non-core assets and businesses in recent years, following a series of scandals and regulatory issues that have tarnished its reputation and profitability.

In 2021, Westpac sold its general insurance business to Allianz for A$725 million ($456.6 million) and its life insurance business to TAL Dai-ichi Life Australia for A$900 million ($566.4 million). The bank also exited its specialist businesses in Asia, Europe, and the United States.

In 2023, Westpac completed the demerger of its wealth management arm, BT Financial Group, which became a separately listed company on the Australian Securities Exchange. The bank also announced plans to sell or close its remaining international branches in Singapore, Hong Kong, China, India, Indonesia, Vietnam, Japan, South Korea, Taiwan, Thailand, Malaysia, Philippines, Cambodia, Laos, Myanmar, Mongolia, Sri Lanka, Bangladesh, Nepal, Bhutan, Maldives, Pakistan, Afghanistan, Iran, Iraq, Syria, Lebanon, Jordan, Israel/Palestine.

Westpac said these moves would allow it to focus on its core banking activities in Australia and New Zealand, where it has a leading position in retail banking, business banking, institutional banking, wealth management, and insurance. The bank said it would also improve its efficiency, capital management, risk profile, and returns for shareholders.

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