Find Banking and Financial Services expertise in Tonga
Tonga has a small and underdeveloped financial sector. There are three registered commercial banks: Westpac, the largest, ANZ and MBf. Westpac and ANZ are Australian multinationals, whilst MBf is Malaysian owned. Westpac began as the Bank of Tonga in 1974 and has been a fully owned subsidiary of Westpac Banking Corporation since 2008. Westpac provides full commercial and savings facilities for Tongan residents. ANZ and the MBf Banking Group have operated in Tonga since 1993 and they too provide full commercial banking facilities. There is a government-owned developmental financial institution, Tonga Development Bank, which lends money to key sectors of the business community including agriculture, manufacturing and tourism. It also provides savings accounts.
Regulation of Financial Services
Tonga’s financial sector is regulated by the Reserve Bank of Tonga under the 1988 Act and operates within the framework of the Prudential Statements. The bank regulates currency, manages external reserves, provides assistance to the Minister and is the principle banker for the Government. Banks registered with the Reserve Bank of Tonga are largely self-governing with each board and governor managing policies, procedures, risk and business within their own establishment.
Development of Financial Services
Tonga places 6th out of 24 countries in East Asia and the Pacific region in ease of doing business according to the World Bank (2011). With regard to getting credit, Tonga ranks in 10th position, just one place below China. Its ranking when it comes to protecting investors is moderate, 16th out the 24 countries listed in the region. The Reserve Bank of Tonga offers investors the chance to purchase government bonds, which are exempted from Tonga Stamp Duty and Income Tax. Investments made by members of the public, either resident or non-resident, are protected under the Public Finance Management Act (2012). There have been steps to improve the money management skills of the general population with two of the major banks, ANZ (2010) and Westpac (2007), launching educational programs. Developments in money transfer systems have also taken place, with some banks making telegraphic transfers more affordable by cutting fees.