IFC buys 10% stake in BSP

THE International Finance Corp (IFC), a member of the World Bank (WB) Group, will acquire a 10% stake in Bank South Pacific (BSP).
The deal involves an investment into BSP of US$140 million (K391 million), including a US$30 million loan (K83 million).
It will be the biggest investment ever made by IFC in the Pacific region.
Adel Meer, IFC principal investment officer for the Pacific, told ABC’s Radio Australia on Monday that State Enterprises Minister Arthur Somare was quoted as saying: “The new alliance offers an excellent opportunity for PNG’s national bank to greatly improve its level of services.
“It comes as BSP struggles with a falling share price and criticism from the PNG investment community.”
Meer told ABC that part of IFC’s role is in facilitating the growth of well-established local players and helping them strengthen their capital base and offer a wider variety of financial services.
When ABC asked IFC about its stakes in over 100 banks across the world and what IFC would bring to BSP, Meer replied: “I think it’s a little bit of everything.
“I mean, the way IFC is structured, we have our own branch of advisory services, which we hope is going to work closely with the management team of BSP, to help them role out their rural programme.
“We’re also working with them on establishing a mobile banking platform.
“On the capital and investment side, we hope our capital would allow the bank to leverage its operations further, so it gives BSP a much healthier capital adequacy ratio … so in case it wants to even grow organically or inorganically.
“It has the right capital base to support that growth,” Meer added.
He stressed: “There are two facets to our engagement with BSP that we really hope would have a direct impact on the borrowers and people in the Pacific.
“You could have an increase in the loans being granted and in areas which are not being served by other banks today, as well as, I think, deposits.”
Meanwhile, BSP chief executive officer Ian Clyne said: “IFC’s financial commitment reflects its confidence in our bank’s strength and growth strategy.
“Its investment and technical expertise that will be available v would further build and diversify our capital and customer base, allowing us to position ourselves as a leading provider for banking services in the Pacific,” Clyne said.