BANKING INQUIRY SLAMS WESTPAC, ANZ PRACTICES IN FIJI

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SUVA, Fiji Islands (February 18, 1999 - PACNEWS/Fiji Times)---An inquiry into Fiji's banking industry has found that the Australia and New Zealand (ANZ) and Westpac banking corporations have far greater profit margins in Fiji than they do worldwide.

The Fiji Times newspaper reports the inquiry has found that the two banks in Fiji maximize their profits in a market that lacks sufficient competition. And it says if the banks' services and fees don't become more customer friendly, the government may have to implement controls.

Finance Minister Jim Ah Koy commissioned the inquiry last year, after his office received complaints from the public about banking services.

The inquiry committee stops short of suggesting a cartel but says in its report there is evidence of "price leadership" where banks duplicate fees and charges. The report also highlights what it says is the declining quality of service by banks in recent years and their apparent insensitivity and indifference.

The report recommends the setting up of a Banks Commission to address customer complaints. It says if there is no improvement, the Government may have to implement controls.

The report also says the banks' high level of profitability also reflects the high interest rate spreads and high levels of fee charges. It says most of the concerns raised in submissions to the committee were justified. The submissions were over alleged high fees and charges.

Submissions to the committee also raised concerns about high interest rate charges on loans and low deposit interest rates. Members of the public were concerned that the banks were earning high profits at a time when Fiji's economy was recording negative or limited rates of growth.

The committee says there are insufficient products available for lower income earners who have difficulty meeting opening or minimum balance requirements. It has also recommended a review of the banks' policy of centralization and withdrawal from small towns.

The report is expected to be tabled in Parliament today.

FIJI GOVERNMENT CAUTIOUS ON BANK INQUIRY FINDINGS

SUVA (February 18, 1999 - PACNEWS/INCL)---The Fiji Government is willing but cautious about implementing the recommendations of a hard hitting report on the country's banking industry.

Finance Minister Jim Ah Koy said the government will do whatever it can about the report's findings, but the government elected in the May general election will have to implement the bulk of the recommendations.

Commissioned by Ah Koy last year, the report has sharply criticized the Australia and New Zealand (ANZ) and Westpac banking corporation's activities in Fiji.

It said the two dominant banks have profit margins in Fiji that are the highest in their operations worldwide. It also said the returns that banks and other financial institutions in Fiji enjoy, more than adequately cover the risk factor that banks use to justify their high fees and interest rates.

The high margins and interest rate spreads that banks in Fiji enjoy need to be reviewed in light of the high profits they make, according to the report.

It recommends the setting up of a Banking Commission that would monitor the level of bank fees, charges and interest rates, with the power to act on any excessive increases.

Prime Minister Sitiveni Rabuka said although the government has given an undertaken to implement the recommendations of the report, it will have to do so with a degree of caution -- for the sake of consumers.

Rabuka said implementation will have to be done in such a way that it does not cause any undue stress in customer-bank relationships.

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