Bank South Pacific’s Immoral & Draconian Retail ‘Service’ Fees

BSP is gaining regional market share but is losing once loyal domestic clientsRowan Callick of The Australian has written an interesting article in this month’s Islands Business regarding Bank of South Pacific’s strategic growth within the Pacific banking industry. It may be that within the next five years PNG’s largest bank will also be the largest financial player in the Pacific.

In 2004 BSP bought Westpac in Niue, then it purchased the small Fijian lender Habib Bank in 2006, followed by the acquistion of National Bank of Solomon Islands in 2007. More recently, BSP has admitted that it is committed to also acquiring Colonial Bank (owned by the Commonwealth Bank) in Fiji. It is no surprise that the Commonwealth Bank is thinking about cutting loose all connections with Fiji as the country under Bainimara is no longer conducive to the goals of its parent company. It is more than likely that the BSP-Colonial deal will be brokered before the end of 2009. BSP’s new CEO Ian Clyne has also indicated that its next targets will be the National Bank of Vanuatu and a Samoan bank – either the National Bank of Samoa or the Samoan Commercial Bank.

Ironically, while BSP is increasing its capitalisation off-shore, cracks are now beginning to appear in its PNG stronghold where once loyal customers are threatening to leave the bank altogether due to the recent introduction of a new set of extravagant banking fees that became effective as of August 1, 2009. One such example of BSP’s unreasonableness is its unheard of draconian policy of claiming 2% of any cheque or cash deposit including withdrawls which value is greater than K5,000 (AU$2,260). That’s for existing customers – if you aren’t a BSP customer the bank takes a 5% cut! It seems that in an effort to accommodate the saturation of its own growth within the PNG banking industry, the bank has now turned its attention to gross corporate abuse of the commons in a repugnant move that can only be described as daylight robbery.

Public reaction has been harsh with existing clients already planning a petition and an official complaint to the country’s Independent Consumer and Competition Commission (ICCC). One client has started up a Facebook Group titled ‘Against BSP New Retail Fees‘ whose membership has passed one-hundred members in a few days and is still growing.

Because BSP has a regional strategy, it is not unlikely that similar retail ‘service’ fees will also be introduced to its branches in Niue, Fiji, and Solomon Islands once the bank has gained enough market share to justify to its egotistical self the need to impose its immoral fees in those respective markets. And what of BSP’s shareholders who are benefiting from these lavish charges? Not a word! There is a fine line between providing a service and abusing that service, and Bank South Pacific – you have crossed that line.

And now for the final word, a paragraph from BSP’s own Mission Statement located on its website:

Our future is your future – it’s about growth – growth built on a culture of excellence – a culture that extends from how we think,   to how we behave. We will focus on you, our client, because we  believe that building and maintaining relationships is the key to  our success. Good service is paramount to us. Our entire  business is about serving our clients, understanding who they  are, listening to them and meeting their needs“.

O BSP, yupela lainim pinis ‘pasin bilong giaman tu i orait’!

~ by Tavurvur on August 14, 2009.

9 Responses to “Bank South Pacific’s Immoral & Draconian Retail ‘Service’ Fees”

  1. I really don’t have much choice. Other banks in the country are charging similar fees.

    BSP could do better by at least considering the masses who cannot afford to live by the recently effected outrageous fees. If BSP is the people’s bank (slogan – Your Bank), I really don’t think it’s a fitting description.

    The best thing to do is to petition the ICCC to look into this.

  2. Syl,

    If other banks are charging similar fees, it makes you wonder whether there are grounds for anti-trust claims to be reviewed. The PNG banking industry may just be breaking the rules by colluding with each other – it’s not out of the question, it has happened before.

    Tavurvur

  3. Tavurvur

    The article is really true. BSP is such a reap off. I realise that even when you are taking a loan, they charge very high interest rate on top of the so call service fee (which is some % of the amount loaned for).I took a loan of K6000.00 and to my dismay, I was only given K5,500.00 as the other K500.00 goes to service fee and stamp duty and my total amount to be repaid went up to almost K9,000.00. I was horried but cannot do much. I swear I will not take another loan from BSP again…I prefer Savings and Loans as they serve small peoples interest….BSP is totally evil with their profit making motive. I will have all my savings withdrawn from my Achiever account and deposit them into a Teachers Savings and Loans. I had enough of BSP’s ridiculous fees here and there.

    Linda

  4. It sad to think and seeing this happening. BSP is supposed to be a truly PNGean Bank i.e., to serve the needs and aspirations of the population. Unfortunately this is not what seem to be happening with their draconian bank fees and complicated paperwork that the simple PNGean cannot afford to when trying to open up account – is this by design to aliniate. So whose interest are they serving – forgot their “Mission Statement” it is not a true reflection of what they truly are. They have made a huge profit in 2009 and what have they given to the shareholders – peanuts, and they are coming up with all kinds of excuses on what they are doing with the surplus/profit which makes it a little hard for the ordinary hardworking PNGean to comprehend and analyses. And mind you, these ordinary PNGeans are the major stakeholders of the bank thru’ bank deposits and as shareholder thru Nasfund, IPBC, Nambawan Supa, PRK and Credit Corp. These are the people that have seen and made this bank what it is today and is the pride of many PNGeans and who have stuck with the bank thru’ thick and thin and all we get is some exhorbitant bank fees and peanuts in the guise of dividends. And now we hear of IPBC, who is the major shareholder, wanting to sell the shares to some foreign investor (See today’s Post Courier article below). Does that sound right? especially when the bank is growing from strength to strength each year? Common can we for once make this a truly PNGean entity. I would’nt be surprised if a truly PNG Bank is controlled and manipulated by foreign interests with a lot of that money going offshore and in the end the Ordinary PNGeans loose.

    Post Courier 24 May 2010:
    “As expected, spiky questions were directed at the board and management of the Bank South Pacific by shareholders during its annual general meeting last Friday over its mooted reversal of a share split.
    Major shareholders such as Nasfund wanted to know the rationale for the board and management’s decision to reverse the bank’s share split from 1-10 but CEO Ian Clyne defended the decision, saying the bank had performed very well.
    At a well-attended Crown Plaza conference room, the board announced a healthy net after tax profit of K257.1 million in 2009 which was a 12.6 per cent increase on the 2008 profit of K228.3 million.
    As at December 31, 2009, the BSP group announced a group total assets of K9.4 billion and the compounded annual growth rate of total assets at 34 per cent since 2005. Shareholders however expressed concern at the rationale for the mooted reversal of the 10 for 1 split made in 2008 and the mere 2.2toea dividend per share announced for shareholders.
    Initially, BSP share price was up around K6 per share but the board and management decided to broaden it to give grassroots Papua New Guineans the opportunity to become shareholders.
    At the time K6 per share was expensive and ordinary people were reluctant to buy them.
    BSP decided to split each share into 10 shares to bring the share price down to 60 toea but that did not make any difference to the company. It only enabled more shareholders. Since the share split, BSP has traded profitably but the dividend came down as a result. At the time of the split, shares were trading at K1.4 per share which was a bit over valued but in December 2009, the share price dropped to 86 toea. Currently, the share price is even lower at 68 toea.
    BSP board and management decided to reverse the split which several shareholders said did not make any sense.
    BSP was going to sell more shares to international investors and the option taken by IPBC to sell their share right at the bottom of the market was in line.
    Shareholders have proposed that BSP increase the dividend a little and use surplus liquidity to buy back shares and cancel them among others.

    Kuia Kange

  5. I never knew of the 2% bank charge fees and got the shock of my life when i had to dish an extra K170.00 to pay for the bank fee when doing cash transactions in down town BSP BANK POM during a field break.

    I was reluctant when the teller mentioned that she was going to deduct K170.00 from a K7000.00 cash deposite that I was making, but i have no other option thus I have to dig deeper and pay it separately.

    How can one comprehend such extravagant fees when the bank is actualy making their money from your money while at the same time robbing you in broad daylight.

    As a commoner, this is totally absurd and gross reap offs for the many thousands of small people who save their hard earned money with them and try to do transactions of more than K5000.00. How can BSP expect you to beleive their home grown slogan of your bank and the heart when actually it cares less for no one.

    When I asked for the receipt for the 2% fee charge, the teller was confused that she had to call her manager for an explanation. I finally got a receipt but left wondering weather it’s own employees understand all these extravagent fees & charges it imposes on the commoner

  6. Hi there

    BSP Retail Banking Fees have gone up again today – costs on withdrawing/depositing on Kundu Saver Account up by up to 800% (from 50t to K4).

  7. See more here: http://masalai.wordpress.com/2010/10/29/bsp-retail-banking-fee-changes/

  8. We can list all the bad things about BSP but I for one wanted to take my children overseas for holiday and they made it easy by issuing me a visa debit card with no cost at all whereas ANZ and Westpac have a very tedious process. Thank you BSP, I am enjoying my travels and my online banking!

    • ‘Rosa Kup Pela’ – I’m glad that BSP has helped you out with a Visa Debit card and online banking. The reality is that these services are expected in today’s modern banking industry. It is difficult for me to accept BSP’s justification of how exactly they are enhancing services for the ‘service fees’ they charge. It will only take some time before a legal case is drafted against BSP. Rgds, Tavurvur.

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