Australia is in the final stages of negotiations with ANZ Group over a deal to keep the bank’s branches in the Pacific, Treasurer Jim Chalmers said on Monday, a diplomatic victory in a region disputed with China.
Many Pacific island countries are losing access to international banking and payments, with Western banks closing branches or cutting ties with their counterparts in the sparsely populated and isolated region.
ANZ CEO Shayne Elliott told Reuters in July that its Pacific branches, the region’s largest network, were unprofitable and that the bank was in talks with the Australian government over their future.
Mr Chalmers said those talks had reached their final stage and the deal would maintain ANZ’s nine centers in the region, which include Fiji and the Cook Islands. He did not mention the terms or when the deal would be finalized.
“The agreement we are working on is another important part of our efforts to keep communities and economies connected, and financial flowing in our neighborhood,” he said in a speech.
While access to banks in the Pacific has been a problem for more than a decade, Washington and Canberra have stepped up efforts to find a solution since China began expanding its influence in the region.
Beijing has already signed defense, trade and financing agreements with Pacific island states. The Bank of China signed an agreement with Nauru to explore opportunities earlier this year, after another Australian bank announced it would pull out of the country.
In July, Australia hosted leaders and central bankers from across the region to discuss solutions. In a sign of the importance of the issue in Washington, United States Treasury Secretary Janet Yellen delivered a virtual opening speech.
With support from both capitals, the World Bank is also preparing an emergency US dollar facility that countries in the region could access for trade and remittances if they were cut off from global finance.
