Nauru banking on Bendigo branch-out
From THE AUSTRALIAN/THE WALL STREET JOURNAL
Tue 05 Nov 2013
SYDNEY, Australia ---- Nauruan savers might soon benefit from the Australian government's generous deposit guarantee if Bendigo & Adelaide Bank proceeds with a plan to open a branch on the tiny South Pacific island, which uses the Australian dollar as its official currency.
Hoping to revive its emaciated banking system, Nauru's government, which is heavily dependent on Australian investments tied to the refugee plan, is in talks with Bendigo & Adelaide Bank to set up a Nauru community branch.
David Adeang, Nauru's Finance Minister, said he expected the bank branch to be operating by January and offer the same services, products and deposit protection as Bendigo & Adelaide offers its Australian customers.
A bank spokeswoman said it hadn't made a final decision on whether to open on the island.
“Broad community support still needs to be secured,” she said.
Zia Gruneler, a 28-year-old Nauruan, said: “We really need it. I'm not spending a lot because I'm trying to save money, so I hide it in a piggy-bank. But my piggy-bank doesn't have interest.”
Australia's financial claims scheme, established in 2008 by the previous Labor government during the height of the global financial crisis, guarantees deposits up to a value of $250,000, which includes Australian dollar deposits of foreign branches of Australian-regulated financial institutions.
The island, which the Australian government uses to resettle refugees from Afghanistan and Iran in exchange for increased aid, has been cut off from the global financial community since it was blacklisted in 2001 due to concerns it was a haven for money-laundering.
Nauru's two ATMs are frequently drained by residents attempting to get hold of cash held in bank accounts offshore.
The Australian dollars used as local currency are worn threadbare, said John Short, an expatriate Australian who works in Nauru's phosphate mines.
“The $5 and $10 bills do laps of the island, so they are almost see-through,” he told The Wall Street Journal.
The move would be Bendigo & Adelaide's first outside Australia. The regional Australian bank has more than $50 billion of assets under management.
The Australian government's refugee program has given the island a much needed boost, but its economy continues to struggle, its government having spent the proceeds from its 1980s phosphate-resource boom.
Australia's government will pump in $US27m ($28.4m) in aid this year -- nearly 40 per cent of Nauru's GDP.
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