BPNG, Commercial Banks Sign Landmark Master Repurchase Agreement
The Bank of Papua New Guinea (BPNG) has signed a master repurchase agreement with the country’s commercial banks in a move set to transform the operation of Papua New Guinea’s financial system.
The agreement establishes a framework allowing commercial banks to borrow and lend to one another — as well as with the Central Bank — on a collateralised basis. Interbank transactions can now be secured with Government inscribed stock, reducing counterparty risk, enhancing confidence between financial institutions, and supporting the development of a more active interbank market.

Papua New Guinea’s Hela Governor Philip Undialu has raised strong objections to the recent rebranding of Bank South Pacific (BSP), calling for the immediate reversal of the decision to drop the bank’s original logo featuring three kundu drums.

Acting as a representative of shareholder companies from Hela Province, Governor Undialu formally wrote to the BSP Board and Management, expressing concerns over what he describes as a disregard for Pacific cultural identity. He said the removal of the iconic three Kundus – a design that has long symbolized unity and heritage across the Pacific – has triggered unease among many Papua New Guineans and shareholders.

The statement that Bank South Pacific (BSP) Finance Group is not majority-owned by Papua New Guinea underscores a critical shift in ownership and control of one of the nation’s most essential financial institutions. This development has far-reaching consequences, raising concerns about national sovereignty, economic independence, and the long-term welfare of Papua New Guineans who depend on BSP for their banking needs. The loss of majority ownership reflects not just a financial transaction but a broader issue of governance, particularly in light of governmental decisions that have prioritized short-term financial gains over national economic stability.

Historically, BSP originated as the PNG Banking Corporation, a homegrown institution designed to serve the people of Papua New Guinea. It was once a symbol of national pride and economic self-sufficiency. However, through successive waves of privatization and restructuring, its ownership gradually shifted away from government and local hands. The decline in Papua New Guinea’s stake in BSP is a consequence of fiscal mismanagement and short-term decision-making by various administrations, leading to a gradual erosion of national control over this crucial financial entity.