Bank South Pacific (or BSP) is Papua New Guinea’s largest bank, with 35 branches throughout the country and in operation in 6 countries. BSP currently services over 650,000 business banking customers throughout the Pacific. As of 31 December 2014 BSP has total assets valued at K15.8 billion.
The bank traces its history back to 1 May 1957 when the National Bank of Australasia established a branch in Port Moresby. As independence approached for Papua New Guinea (PNG), the incoming government made known its desire that all banks in PNG be locally incorporated, rather than branches of a foreign parent. In response, the National Australia Bank (NAB) incorporated its operations in 1974.
Then the government encouraged the bank to sell equity to local citizens. BSP conducted public offerings in 1980 and 1981, with the result that local citizens came to hold 13% of the bank's shares. Later, the government decided to acquire control of BSP. In 1993, National Investment Holdings Limited (NIHL) first acquired NAB’s 87% shareholding, and then the 13% of the shares in the hands of the public, giving it 100% ownership of BSP. In 1995 the government decided to increase the bank's capital base, which it achieved by selling a 25% stake to Credit Corporation (PNG) and a 22% stake to Motor Vehicles Insurance (PNG) Trust (now incorporated as Motor Vehicles Insurance Limited).
In 1916, Commonwealth Bank, the Australian government-owned bank, established a branch in Rabaul and agencies in other towns, to support the banking needs of the Australian Army and its troops who had taken control of the former German colony of New Guinea. In time, this operation became a full-fledged commercial banking operation. Then in 1974, Commonwealth Bank withdrew from PNG by transferring its operations to the new government, which gave the bank the name "Papua New Guinea Banking Corporation" (PNGBC). Unfortunately, PNGBC ran into problems so in 2002, BSP acquired the government’s 49% stake in PNGBC in return for giving the government a 25% stake in BSP. Between 2002 and 2008 BSP and PNGBC merged.
Since 2004, BSP has pursued a strategy of expanding in the South Pacific. It first acquired Westpac’s branch in Niue, which was the only bank of any kind on the island. Westpac had established the branch in 1988 but was interested in reducing some of its operations in the area. Two years later, in 2006, BSP made two further acquisitions. It bought National Bank of Solomon Islands from the government of the Solomon Islands, and it acquired Habib Bank (Fiji), which had begun in 1991 as a branch of HBL Pakistan.
In December 2009, BSP wholly acquired Colonial National Bank from Commonwealth Bank, thereby further increasing its presence in Fiji.
In April 2013, BSP sold its Niue branch to New Zealand bank Kiwibank after nine years on the island.
On 29 January 2015, Bank of South Pacific announced that BSP has entered into an agreement to acquire Westpac's banking operations in Samoa, Cook Islands, Solomon Islands, Vanuatu and Tonga for A$125 million.History of Westpac's operations in Samoa, Cook Islands, Solomon Islands, Vanuatu, and Tonga
In 1988 Westpac acquired the European Pacific Banking Corporation in the Cook Islands and a HSBC subsidiary, the Solomon Islands Banking Corporation, which HSBC had established as a branch in 1973. Westpac also acquired HSBC's branches, one each, in Fiji and the New Hebrides (now Vanuatu). (HSBC had established its branch in Fiji only some 18 months earlier.) In 1990, Bank of New Zealand sold half its shares in Bank of Tonga to Westpac and half to Bank of Hawaii, giving each of them 30%. In 2001 Bank of Hawaii sold its interest in Pacific Commercial Bank (42.7%) to Westpac, which held an equal portion. WBC offered Samoan investors, who held the remaining shares, the same price it had paid Bank of Hawaii. Westpac ended up owning 93.5% of Westpac Bank Samoa and Samoan companies and individuals owned 6.5%. In Tonga, Bank of Hawaii sold its shares in Bank of Tonga to Westpac, giving WBC 60% ownership of what became Westpac Bank of Tonga.