Accessing banking services in the Pacific is difficult, and it could soon become worse.
Some Western banks have been getting out of the region, and Australia fears a full-blown exodus in coming years.
For example, Australia's Bendigo Bank has announced it will withdraw from Nauru next year — a move that risks leaving the small Pacific nation without a bank.But in recent years it too has sold off assets in Papua New Guinea, closed 10 branches across the region and exited both American Samoa and Guam.
That means critical transactions and payments rest on a dwindling number of key commercial relationships. It would also mean businesses would struggle to make cross-border payments, dealing a hit to trade and exports — something the Pacific can ill afford right now during its fragile post-pandemic recovery.It's complicated. But banks point the finger at two main problems.
Banks are also sceptical that Pacific regulators and police have the tools they need to combat financial crime, particularly that carried out by sophisticated international actors. But not everyone in the Pacific sees the problem from that perspective, even if they come up with a very similar diagnosis.
Reuters has also reported that Chinese banks have "expressed interest" in setting up branches in Tonga, Samoa and Solomon Islands, citing central bank representatives from all three countries.Bendigo Bank has delayed plans to leave Nauru and close the Pacific Island country's only bank after a Chinese state-owned alternative signalled it may be willing to fill the void.
And there are murmurs the Commonwealth Bank might agree to replace Bendigo in Nauru, potentially with support from the federal government, although neither the bank nor Australian officials want to comment at this stage.These negotiations aren't always easy. Unlike China, Australia can't simply strongarm the private sector, and it doesn't have a network of vast state-owned entities it can deploy to pursue its objectives.
Australia Bank Banking Banks Financial Institution Anz Bendigo Bank Westpac Nauru Fiji Tuvalu Solomon Islands
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