Australia has pledged a decade-long A$2 billion ($1.26 billion) loan guarantee to ANZ Group (ANZ.AX) to maintain its Pacific branch network, marking a strategic move amid regional competition with China.
The federal government assesses the likelihood of the guarantee being called as “very low,” with ANZ required to pay an annual fee for the arrangement. In addition, ANZ will invest an extra A$50 million into its Pacific banking operations to enhance services and expand digital banking capabilities.
This initiative aligns with efforts by Australia and the United States to strengthen financial connectivity in the Pacific. In July 2024, officials from both nations committed to improving banking services in the region, addressing challenges Pacific Island countries face in accessing global financial systems.
Many small Pacific nations have struggled with Western banks reducing operations, limiting access to U.S. dollar-denominated accounts, and creating opportunities for Chinese financial institutions to expand. In 2024, Bank of China (601988.SS) signed a deal with Nauru to explore financial opportunities, highlighting Beijing’s strategic interest in the region.
ANZ CEO Shayne Elliott emphasized the bank’s long-standing commitment to the Pacific, saying, “ANZ has been in the Pacific for more than 140 years and it continues to be an important part of our international network.” He acknowledged the complexities of operating in the Pacific but reaffirmed ANZ’s dedication to supporting economic development and infrastructure.
The loan guarantee is expected to commence in the second half of 2025, following necessary legislative processes.
