Banking.
From The Report: Papua New Guinea 2012
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PNG’s banking sector is dominated by three major players: BSP, ANZ and Westpac. The challenges they face are familiar to emerging markets, including limited capital, riskier commercial loans and a largely unbanked population. The current issue is an excess of liquidity, as banks have accumulated plenty of cash through a build-up of foreign exchange reserves, yet are hesitant to lend it out. To incorporate more people within the formal banking system, the government is expanding the National Development Bank, while the private sector is counting on mobile banking to reach rural inhabitants.

This chapter includes interviews with Loi M Bakani, Governor, Bank of Papua New Guinea; and a roundtable discussion with Vishnu Mohan, CEO (PNG), ANZ Banking Group; Ian Clyne, CEO, Bank South Pacific (BSP); and Ashleigh Matheson, Managing
Director, Westpac Bank (PNG).

Articles from this Chapter

Overview

Steady on: Increased domestic involvement and solid oversight point towards future growth
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Despite a number of ongoing challenges, Papua New Guinea’s banking sector is poised for expansion in the coming years. The industry has seen significant growth over the past decade, primarily as a result of government leadership and rapid development in the economy due to a handful of major energy and mining projects. In general, three commercial banks –the Bank of South Pacific (BSP), Australia and New Zealand Banking Group (ANZ) PNG and Westpac PNG – currently dominate the sector. As…

Interview

Playing the long game: OBG talks to Loi M Bakani, Governor, Bank of Papua New Guinea
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Interview: Loi M Bakani What tools will the central bank use to promote stability and economic growth? LOI M BAKANI: For price stability the strategy will be to manage excess liquidity through open market operations so that price stability-entailing low inflation, stable interest rates and a stable exchange rate are all maintained. This requires government assistance, through disciplined spending and transferring trust account funds to the central bank. For financial system stability, the strategy…

Analysis

Planning for expansion: A new development strategy lays out the central bank’s goals through the end of 2015
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In late 2011 the Bank of Papua New Guinea (BPNG), the country’s central bank, launched its 2012-15 Strategic Plan, which will serve as a blueprint for the financial services sector. The plan is made up of a number of major development initiatives, in addition to more general goals and strategic objectives. Broadly, it represents a mandate for BPNG to continue to expand its regulatory capacity in relation to all sector aspects. The plan lays out six key areas of focus for the central bank: monetary…

Viewpoint

OBG talks to Vishnu Mohan, CEO (PNG), ANZ Banking Group; Ian Clyne, CEO, Bank South Pacific (BSP); and Ashleigh Matheson, Managing Director, Westpac Bank (PNG)
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Interview:Vishnu Mohan,Ian Clyne,Ashleigh Matheson What measures are in place to ensure transparency and good corporate governance in the sector? VISHNU MOHAN: Banking is extremely well governed here compared with similar developing countries. The central bank is very dependable and well versed. Because global financial markets evolve and change rapidly, this is an ongoing learning process for the entire sector and not just the authorities. Given that, the conditions here are…

Analysis

On the line: Delivering microfinance products on mobile networks
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Boosting financial inclusion and literacy is a key challenge facing the domestic financial services industry in Papua New Guinea. Based on recent estimates from the Asian Development Bank (ADB), only around 15% of the population has a bank account. The remaining 85% remains cut off from the formal financial system. Similarly, PNG’s informal sector is thought to account for 80-85% of overall economic activity in the country, dwarfing the formal economy, which consists primarily of the energy,…