Australia nears deal with ANZ to stop bank closures in the Pacific

By Lewis (JO:) Jackson

SYDNEY (Reuters) – Australia is in the final stages of talks with ANZ Group over a deal to maintain the bank’s branches across the Pacific, Treasurer Jim Chalmers said on Monday (NASDAQ:), a diplomatic win in a region contested with China.

Many Pacific Island countries are losing access to banks and international payments as Western banks close branches or cut ties with their counterparts across the sparsely populated and remote region.

ANZ CEO Shayne Elliott told Reuters in July its Pacific branches, the largest network in the region, were not profitable and the bank was in talks with the Australian government over their future.

Chalmers said those talks had reached the final stages and the deal would maintain ANZ’s nine hubs in the region, which include Fiji and the Cook Islands. He did not mention terms or when the agreement would be finalised.

“The deal we’re working on is another big part of our efforts to keep communities and economies connected, and finance flowing in our neighbourhood,” he said in a speech.

While bank access in the Pacific has been an issue for more than a decade there has been renewed impetus for a solution in Washington and Canberra since China began expanding its influence in the region.

Beijing has already signed defence, trade and financial deals with Pacific island states. Bank of China inked an agreement with Nauru to explore opportunities there earlier this year after another Australian bank said it would pull out of the country.

Australia hosted leaders and central bankers from across the region in July to discuss solutions. In a sign of the issue’s status in Washington, U.S. Treasury Secretary Janet Yellen delivered a virtual opening address.

With backing from both capitals, the World Bank is also preparing an emergency U.S. dollar facility that countries in the region could access for trade and remittances if they are cut off from global finance.