- The Treasurer will speak at the Pacific Banking Forum
- Continued banking presence in Australia is essential
The Albanian government has asked major Australian banks to continue operations in Pacific countries amid fears that withdrawing services would allow China to increase its influence in the region.
Treasurer Jim Chalmers will address the importance of continued cooperation and multilateral collaboration between Australia and the Pacific in his keynote address at the Pacific Banking Forum on Tuesday, calling on the private sector to do its part.
“We know how crucial these services are to local communities,” he said.
“That’s why we’ve been actively speaking to all the major Australian banks to let them know how important the government values Australia’s continued banking presence in the region.”
His comments come as Pacific countries face the fastest withdrawal of banking services globally, barring their banks and populations from accessing cross-border payment services, global financial systems and funding for essential projects.
Workers in Australia are also not allowed to send money back to their home countries.
This has raised fears of increased influence by the Chinese Communist Party, whose state-owned bank has already signalled its intentions to operate in Papua New Guinea, after establishing a presence in the capital, Port Moresby.
Dr Chalmers will also announce a $6.3 million funding boost to help bolster enforcement systems and processes so banks are incentivised to continue operating.
Treasurer Jim Chalmers will urge Australia’s major banks to keep branches open
The funding is split into three initiatives: $2.9 million to the World Bank to help develop an inclusive and secure digital identity infrastructure, $1.7 million to the Asian Development Bank to boost anti-money laundering and counter-terrorism financing compliance, and $1.7 million to support criminal justice and law enforcement efforts to be administered by the Attorney General’s department.
He listed five goals for Australia, including an attempt to reverse the decline in services, relieve immediate pressure on local institutions, attract new private investment to markets and improve the measure of integrity to boost market confidence.
“Ensuring all Pacific countries have access to a safe, secure and stable banking system is one of Australia’s top priorities in the region,” Dr Chalmers said.
‘You can trust Australia to work with you to keep the Pacific connected to the global financial system.’
Dr Chalmers will also announce on Tuesday that he will attend the Pacific Islands Forum Economic Ministers’ meeting, taking place in August in Suva, Fiji, where he will update ministers on progress to date.
On Monday, ANZ boss Shayne Elliott said it was difficult and risky for banks to operate in Pacific areas because of smaller economies and trading conditions.
There are fears that the continued withdrawal of banking services in Australia will allow China to increase its influence in the Pacific region (file image)
ANZ has the widest reach of any Australian bank in the region, with 19 branches, yet has closed 10 branches, excluding Papua New Guinea, in the past five years.
It also left American Samoa and Guam in 2022.
“Each country has its own laws, regulations, customs and taxes. While it is important for each country to chart its own course, this can create costs for companies wishing to operate across the region,” he said.
He said banks would find it easier to operate if Pacific countries adopted common laws, implemented “consistent regulation” and enhanced “regional efforts against financial crime.”
“Countries with high costs and risks that do not offer scale have become less attractive to banks,” he said.
‘While the Pacific is not the only country facing this challenge, it is an area that is severely affected by it.’