By John Duchemin
Advertiser Staff Writer
Pacific Century Financial Corp., parent of Bank of Hawai‘i, has sold its minority interest in two small South Pacific banks — the third asset sale in three weeks for the $13.9 billion banking company as it tries to streamline operations and improve profitability.
The bank sold its 30 percent interest in the Bank of Tonga and its 42 percent share of Pacific Commercial Bank of Samoa to Australia-based Westpac Banking Corp. Westpac helped Pacific Century found both the Tonga and Samoa banks in the 1970s, and is the managing partner in each venture.
Pacific Century would not disclose terms of the deal, but the bank’s president and chief operating officer, Richard Dahl, said the sale would have little effect on earnings.
"These banks are quite small. Frankly, you don’t see them in our financial statements now, and you won’t notice when they’re gone," Dahl said.
Although the deal was small, it was the third in a quick succession of deals that have occurred since Michael O’Neill, Pacific Century’s chairman and chief executive officer, took over Nov. 3. Pacific Century on Dec. 20 announced the sale of its credit card business to American Express, and on Dec. 27 announced the sale of its nine Arizona branches to Zions Bancorp.
In each case, the bank has said it wants to streamline its operations, part of a three-year effort to stimulate stock value after the bank struggled in the state’s slow economy of the late 1990s.
The Tonga and Samoa banks were profitable investments, but Pacific Century said yesterday that it wants to focus on operations where it has majority control. Pacific Century had no employees or brand presence at the Tonga and Samoa banks — unlike its other South Pacific subsidiaries, which are staffed with Bank of Hawai‘i personnel and sell Bankoh products.
"In Samoa and Tonga, we had significant minority positions — enough ownership where we had to have a rather acute level of attention to what’s going on, but really didn’t control it," Dahl said. "It was a large enough share to make us spend some time, but not enough to really matter."
Dahl said the bank plans to keep its other South Pacific assets, which include branches in French Polynesia, Fiji, other island nations and a 17 percent stake in Australia’s Bank of Queensland. The bank’s South Pacific operations are part of its regional banking network, which spreads from Asia to the U.S. Mainland.
Pacific Century helped form the Tonga and Samoa banks in the early 1970s. The Bank of Tonga served as the official government bank until the mid-1980s and printed the official Tongan currency. Pacific Commercial Bank concentrated on home loans to Samoa residents.
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