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| NZ Banks in Fiji cop new decrees from the commodore. |
| Friday, 17 April 2009 08:27 | |||
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Three of the “big four” "Australian banks" may look to alter their operations in Fiji after being saddled with a raft of new restrictions imposed by the country’s military regime. ANZ and Westpac are two of the major banks in Fiji, along with Colonial, a subsidiary of Commonwealth Bank of Australia. When Commodore Bainimarama announced the 20% devaluing of Fiji’s currency, he also imposed new rules on how the banks operate. They will now have to adjust interest rates back to their level at December 31 last year; reduce interest rate spreads (the difference between the interest rates they pay depositors, and charge borrowers) to 4% by the end of the year; and set up specialised micro-finance service centres in all their branches. “While some work has started in this regard, much more and urgent work is required to make a real difference to the life styles of the poor and the rural dwellers including outer islands,” Fiji’s Reserve Bank says in a statement. “Micro-finance will empower the rural sector to be more actively involved in the economic activities of the country.” The Pacific Islands represent a small part of the Australian banks’ activity anyway and it is by no means certain that they will be happy to continue operating at the same level in Fiji under these restrictions. Massey University Center for Banking Studies director David Tripe says the regulations may have negative outcomes for Fijian customers, as banks will be less inclined to lend money in that market. “It simply means they’ll devote less effort to trying to run a profitable and successful business in Fiji,” he says. Dr Tripe adds that the Australian-owned banks are likely to “sit tight” and would probably be interested in, for example, a government buyout – assuming, of course, that the government could pay. “But it’s a pretty small part of their overall business, so from that perspective, it’s not that big a deal.” An ANZ spokesman told NBR the bank was working with the Reserve Bank of Fiji to understand the new requirements. “ANZ's operations in Fiji date back 130 years, and we are fully committed to supporting our business, staff and customers in Fiji and across the Pacific,” he says. ANZ’s profit for the entire Pacific region, where it operates in at least 10 countries, was $A69 million for the half-year ended September 30 2008. The Reserve Bank of Fiji says the interest rate controls are to assist the business sector to have a more stable interest rate environment and allow depositors to earn respectable interest rates. Colonial’s best interest rate offered on its savings accounts is 1.25%, for balances of over $F2000 in its “Classic Saver” account. Its 12 month fixed interest home loan rate is 7.50%, while the floating rate is 9.50%. A customer with at least $F1000 to place on a 12 month term deposit would get a 4.50% return. Dr Tripe says interest rate spreads in Pacific Island nations are typically higher than in New Zealand: "If they could get an interest rate spread of 4% in New Zealand, they’d be rubbing their hands with glee."
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| Last Updated on Friday, 17 April 2009 08:42 |