BANK South Pacific (BSP) has made a non-binding and conditional offer to acquire the banking and insurance businesses of the Commonwealth Bank of Australia (CBA) in Fiji Is.

After BSP made a recent approach to CBA expressing its interest in acquiring Colonial Fiji, talks were initially very general in nature, Ian Clyne, BSP chief executive officer, said.
“CBA’s general response was that should they receive an offer on Colonial (whilst they are not officially looking at selling), they would have to consider any such offer and submit it to their board for review,” he said.

“Based on the outcome of that due diligence process, BSP will decide whether to proceed or not,” he said, adding any final decision to purchase required BSP board of directors approval, acceptance by the board of CBA, and regulatory approval of Bank of PNG and the Reserve Bank of Fiji.

“The potential acquisition of Colonial Fiji is a very exciting opportunity for BSP … BSP will have a Pacific network to match our competitors ANZ and Westpac.

“We are a PNG-owned bank with a true vision, understanding and commitment to the Pacific.
“BSP and Colonial very much complement each other’s business activities that the acquisition is simply a great fit between two great organisations in two great countries,” Mr Clyne said.
This offer is subject to due diligence after which the parties expect to sign a share sale agreement.

“The transaction is expected to reach completion toward the end of September this year,” according BSP company secretary Mary John.

This initiative was consistent with its Pacific based strategy and follows considerable dialogue between the two banks over the past few months, she said in a statement released to the Port Moresby Stock Exchange (PomSOX) yesterday.

Mr Clyne said the existing business of BSP branch (Fiji) was profitable and the bank had developed excellent relations in Fiji.

“But the scale of the existing business is not a size where BSP can justify additional investment to expand the range of banking products that the market in Fiji demands.
“The market share of BSP following the acquisition of the Colonial Group would be in excess of 20% with the bank increasing its service levels and product offerings to the people of Fiji,” Mr Clyne said.

Noreo Beangke, BSP chairman said BSP was pleased to have this opportunity to increase its commitment to Fiji. “It is a regional strategy. We have been and will be in the region for a very long time,” he said.

Meanwhile, Garry Mackrell, group executive international services, said that CBA board had considered the terms of the offer and agreed to further discussions and the start of due diligence.

The transaction is subject to regulatory approvals in Fiji and PNG.