A CASE STUDY ON BANKS IN FIJI
COMPILED BY: SHINAL PRIYANKA CHAND
Fiji has a well developed financial system that not only is secure and sound but has remained flexible despite the recent global financial crisis. The strong involvement of the banking industry to the Fiji Financial System has been a major factor in this regard. Over the years the Banks have invested heavily in Fiji and have remained committed to delivering services that have helped shape and develop our country into what it is today.
At the end of 2010 the commercial bank’s assets alone was approximately 42% of the entire financial system and this ...view middle of the document...
The downward movements in interest rates expected to provide incentives, for investors to borrow and pursue business opportunities, raise household’s disposable income and more importantly boost the economic recovery.
1.1 BACKGROUND OF THE STUDY
The Association of Banks in Fiji ("ABIF") was created, in 1971 to accomplish a requirement for the banking industry to have a sound and effective financial institution in Fiji. The Association's membership consists of all licensed commercial Banks presently operating in Fiji under the Banking Act.
The ABIF is recognized as the representative body for the nation's banking industry, promoting and protecting the interests of its member-Banks. The Association considers, represents and makes known the views of its member-Banks on legislative, economic, fiscal, and monetary or matters of national importance.
Fiji’s pioneer bank—the Fiji Bank and Commercial Trading Limited—was taken over by the Bank of New Zealand (BNZ), after only 3 years of operation. BNZ in turn was taken over by the Australia and New Zealand Banking Group (ANZ) in 1990, bringing to end the operation of the longest serving bank at the time—114 years; the second longest serving at the time was Westpac Banking Corporation (WBC)—89 years at the time.
The acquirer of BNZ’s operations, ANZ, which opened its Fiji branch in 1952, is today the largest bank in the industry, controlling around 43% of total banking assets in 2010. ANZ’s growing governance is a result of a number of acquisitions over many years, including Citibank (1970–78), Barclays Bank International (1972–85) and Bank of Hawaii (BOH; 1993–2001).
The second largest bank in Fiji today is WBC, controlling around 29% of total banking assets in 2010. The bank established its Fiji branch in 1901 and is thus also the oldest bank currently operating in the country—111 years. WBC’s acquisition includes Honk Kong and Shanghai Bank Limited (1986–1988).
And our own National Bank of Fiji, as you might recall, was acquired by CNB (51%) in 1999 with the remaining 49% in 2006. Of course, CNB was acquired by Bank South Pacific (BSP) in 2009.
My objective of this study is to evaluate the recent developments that have taken place in the banking industry. These developments in the financial institutions exert a powerful manipulation on economic expansion, poverty alleviation and stability of economies.
Some prominent industry-related initiatives that ABIF has either initiated or participated in since the beginning of this millennium are:
(a) Conversion of Banks’ security documentation to a reduced, A4 dimension in consultation with the appropriate authorities, and modernising prescribed forms.
(b) Establishment of a Credit Reference/Data bureau with a potential to extend coverage wider than Fiji.
(c) Facilitation of improved cash transportation arrangements for its member-Banks.
(d) Extensive review and...