Banking Circles Abuzz Over Kina Takeover Moves Here
Westpac Fiji, Kina Bank PNG staff briefed: It’s still on
Well, what a week that’s been in Papua New Guinea’s Kina Securities (Kina Bank) plan to take over Westpac bank operations in Fiji.
Drama and intrigue all round.
First, came whispers that the deal was off. Kina Securities’ planned financing had run into a hiccup.
Then came increasing speculation that this could be an opportunity for our own HFC Bank to step in and take over Westpac, perhaps with Fiji National Provident Fund support.
That would have been a game changer in the local banking market.
Finally, came end-of-the-week news from Port Moresby. Kina Securities had assured staff the takeover was going ahead, would be completed by the end of this year.
The Fijian banking sector had been abuzz with word that Kina Securities may not go ahead with the purchase and that HFC may step in for the right price.
This led to management of Papua New Guinea based Kina Securities addressing its staff to dispel any rumours.
It is understood that Westpac Fiji staff on Thursday were also informed that the takeover is going ahead as planned.
There is increasing speculation that a top Fijian will take over to lead operations here when King Securities takes over.
If HFC had come into the running to buy off Westpac Fiji operations and had won the bidding war, it would have made HFC the second largest bank in the country with a big market share.
At the moment Australian owned ANZ and Westpac and Papua New Guinea owned BSP dominate the Fijian banking sector. Indian owned Bank of Baroda has a strong presence in the cane belt.
French owned BRED Bank is still a minor player.
Kina Bank background
Kina Bank was established in Papua New Guinea in 1985 as a diversified financial services company and is listed on both the ASX and the Port Moresby Stock Exchange (PNGX).
It says it serves retail, commercial and SME customers and offers end-to-end financial solutions including personal banking, small business loans, financial advice and investment management.
Acquisition background
On 7 December 2020 Kina Securities Limited (or “Kina Bank”) had announced that it entered into sale and purchase agreements to acquire 89.91 per cent of the banking operations in Papua New Guinea and 100% in Fiji of Westpac Banking Corporation. Completion of the acquisition was expected by 30 September 2021.
Purchase price of up to A$420 million (FJ$ 663m) (including A$315 million payable on completion and A$60 million payable in A$20 million six monthly instalments after completion and up to A$45 million of future earn-outs to be paid annually over the 24 months following completion).
This was subject to business performance hurdles based on actual performance of the Fiji business, the announcement said.
The announacement said the acquisition was to be funded through a combination of existing cash reserves, cashflow from ordinary operations, retained earnings in the PNG business being paid to Westpac, tier two subordinated debt instruments and potential equity investment from a number of strategic investors.
In a simultaneous Westpac announcement Group Chief Executive, Specialist Businesses & Group Strategy, Jason Yetton, said the sale follows Westpac’s strategic decision to focus on consumer, business and institutional banking in Australia and New Zealand.