IFC supports Bank South Pacific

The World Bank will top up the capital base of Bank South Pacific, the largest locally owned bank operating in the south Pacific.

International Financing Corp, an arm of the World Bank, will buy new shares equal to 10 per cent of the issued capital of Bank South Pacific, which is headquartered in Papua New Guinea. The IFC invests in private companies as one element of the World Bank's assistance and development programs.

IFC will buy a five per cent stake from the Independent Public Business Corporation of Papua New Guinea, a government-owned investment body and which holds a 24 per cent stake at present.

The IFC Capitalization Fund is acquiring another five per cent stake in BSP through the issue of new shares. The IFC equity investment is valued at around US$140 million.

IFC will also provide a loan of US$30 million.

BSP reported a profit of K257 million last year and a return on equity of more than 30 per cent. BSP's retail banking business trades at a loss, with the bank's profit earned from corporate banking.

The bank bought National Bank of the Solomon Islands (from a group of local investors) in 2007 and in Fiji (from Commonwealth Bank) in 2009 for less than net assets.