In the News: ADB commissions a study profiling State-Owned Banks (FBC News)

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ADB commissions a study profiling State-Owned Banks

The Asian Development Bank has for the first time commissioned a study profiling State-Owned Banks.

The Finding Balance 2019 report which will come out later this month looks at the role, performance, market context and regulatory framework of 13 banks from 10 countries in the Pacific.

The Fiji Development Bank was covered under the study and has come out as one of the more impressive banks in the region that continues to post a profit and retain a healthy six percent of the domestic financial sector.

Co-Author for the report, Laure Darcy says among the key messages was the reiteration that state-owned banks need to also be commercially viable.

“If you’re going to be a successful and sustainable bank, you have to be commercially successful so and what we try to show in the study is that there is no incompatibility between having what people refer to as a development mandate and being commercially successful, so that is an overriding theme of the study.”

In the case of Fiji, while FDB does better than some of the banks involved in the study, there are a number of measures it can implement to further improve their bottom line.

ADB’s Senior Financial Sector Expert and Co-Author of the report Peter Dirou says there are several takeaways.

“It was more a case of providing some framework for these banks to improve, self-improve their operations and that’s a traditional finance story. So it’s about providing the right structural foundations in terms of adequate capital, having these banks regulated, FDB is not currently regulated but there is a very strong case for it to be part of the formal financial system.”

The signature Finding Balance 2019 report is expected to be released online later this month with hard copies to be published in August.