Discussions Continue On Purchase of Westpac

by PNG Business News - August 23, 2021

Photo Credit: PNG Buzz

Should the deal be authorized by the ICCC, Kina Securities Limited's position on purchasing Westpac PNG remains on the table, with a discussion of more competition in the banking market.

The bank recently met with the Independent Consumer and Competition Commission to explain its acquisition plan for Westpac PNG.

Greg Pawson, the company's CEO, pledged a K25 million investment in technology and digital innovation, as well as a 50 per cent expansion of Westpac PNG's branch and in-store network in the first three years following the purchase, and the creation of a pan-Pacific bank based in PNG.

“We will expand the distribution footprint of banking services across PNG to reach more Papua New Guineans,” said Pawson.

“We will retain the existing Westpac corporate structure, banking licence, operations and technology – and simply rebrand as East-West Commercial Bank.

“This exciting new bank brand will also be used for Westpac Fiji and positioned as PNG’s international bank brand.”

According to him, East-West Commercial Bank will compete directly with Kina Bank under this multi-brand approach, which is popular in many countries and will provide clients with a full range of competitive, innovative financial services.

“Expanding the distribution footprint will ensure more competition in locations across PNG which are currently only served by one bank or not at all.

“It’s a huge commitment to reinvigorate financial inclusion,” said Pawson.

Kina also sees the possibility of obtaining banking licenses in Australia and Singapore in the longer term, which would increase PNG's access and reach in the area.

Pawson proposed seven important and substantial public benefits to enhance competition, improve access, and create more jobs for Papua New Guineans in his speech.

“Kina will prevent job losses and retain all existing Kina Bank and Westpac employees.

“We will create 50 new PNG based jobs within the first 12 months following the acquisition,” he said.

“All of Westpac PNG’s existing senior management and executive positions will be nationalised and given to PNG local talent, including the country head position.”

Kina Bank's purpose, according to Kina Securities chairman Isikeli Taureka, is to continually increase the prosperity of the people, communities, and markets it serves.

“We strongly believe that this transaction should be approved by the ICCC,” he said.

Taureka also took the opportunity to address head-on the contention by the ICCC that the acquisition would lead to tacit collusion and reduce competition:

“While the concepts of a duopoly and tacit collusion will be addressed in detail in our final economic and legal submissions, the significant disparity in market positions between Bank South Pacific and Kina indicate that such a result is impossible.

“This transaction is in the best interests of the people of PNG, and the banking and financial services industry more broadly.

“The significant public benefits to PNG will be entrenched in the binding commitments by Kina Securities Limited, and enable increased competition with the current dominant force,” Taureka said.



Post-Courier (17 August 2021). “Kina Adamant On Westpac Takeover”.

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Kina Securities Ltd's attempt to purchase Westpac PNG Ltd was denied by the Independent Consumer and Competition Commission (ICCC) (Westpac). After going through the ICCC Act's procedures, ICCC commissioner and chief executive officer Paulus Ain verified this. On March 17, Kina Securities submitted an application to purchase 89.91 per cent of Westpac. “The outcomes and the findings were based on financial information provided and gathered by the ICCC,” he said. “The ICCC has now made the final determination to decline the authorisation sought by Kina Bank.” Despite Kina Securities' proposal to run Westpac as a distinct bank, he said the ICCC was not convinced there would be two independent banks because of a similar ownership structure. Other justifications include: Markets are now extremely concentrated and will continue to be so as long as there are few participants in the market. With the transaction, the number of commercial banks will be decreased to two. The planned purchase would raise the hurdles to entrance and expansion even higher, since the number of banks would be decreased, giving the two current incumbents more market dominance. “The ICCC is concerned that the proposed acquisition is likely to result in prices and profit margins increase,” he said. “Although Westpac has decided to divest its PNG business, it appeared that this would not immediately happen without the proposed acquisition proceeding. “Hence the ICCC considered that Westpac PNG would not be a significant source of competition for at least several years.” Kina Securities and Westpac were contacted for comment but did not respond.   Reference: Mauludu, Shirley. The National (14 September 2021). “ICCC Rejects Kina’s Bid”. 


PNG Business News - September 24, 2021

Kina Calls Off Westpac Deal

Kina Securities (KSL) has called off its deal to buy Westpac's Pacific division. Kina and Westpac Banking Corporation have mutually decided to terminate their purchase of Westpac Fiji and Westpac's 89.91 per cent interest in Westpac Bank PNG, which was intended to broaden Kina's market reach. The transaction was subject to numerous regulatory clearances, and the cancellation comes after Papua New Guinea's regulator, the Independent Consumer and Competition Commission, denied Kina's proposed acquisition of Westpac PNG. The authority body stated that it was unconvinced that the acquisition would not significantly reduce competition or benefit the public. The verdict was made only two months after a preliminary determination reached the same outcome. Kina anticipates its full-year 2021 earnings to be in line with the Company's full-year 2020 results, after accounting for transaction expenses and projected revenue from the acquisition that is no longer expected. Kina’s Managing Director and Chief Executive Officer, Greg Pawson said about the termination, “Whilst we are disappointed that the acquisition has not proceeded, this in no way changes the Company’s strategy of seeking both organic and inorganic growth in PNG and the Pacific region. The outlook of the company remains positive.”    Reference: Loop (22 September 2021). “Kina Securities Terminates Agreement”. 


PNG Business News - March 29, 2021

ICCC Evaluating Kina Banks Acquisition of Westpac

Kina Securities Ltd (KSL) has sent an application to the Independent Consumer Competition Commission (ICCC) for approval of its proposed acquisition of Westpac's Pacific company. Through the authorisation process, ICCC will determine the acquisition's competition consequences and public gains, according to Commissioner and Chief Executive Officer Paulus Ain. This will be achieved by a public review process in which the ICCC will accept comments from stakeholders and the general public before reaching a definitive judgment about whether or not to approve the acquisition under the ICCC Act. “The process that ICCC will conduct is very transparent and it is very important for the people of this country, especially from the finance and banking sector, to get themselves involved,” Ain said. “The process has now started and we are formally inviting the people in the finance and banking sector, other commentators, interested parties and the public to the process on assessment. We are looking forward to seeing a lot of submissions come in and this process starts effectively today (Friday).” KSL is awaiting ICCC approval to purchase 89.91 per cent of Westpac PNG Ltd. The proposed acquisition has reached the threshold needed under section 81 of the ICCC Act for mandatory notification and obtaining ICCC approval to continue with the acquisition, according to the ICCC. The authorisation process, according to Ain, has no bearing on the ICCC's decision on who buys. “This is something that ICCC does not or is not required by law to do this,” he said. “It’s outside of the ICCC’s role.”

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