From Matangi Tonga Magazine Vol. 17, no. 3, November 2002.

The latest developments in Tonga’s banking business saw the amendment of the Tonga Development Bank Act on September 5, affirming the right of the TDB to continue providing commercial banking activities in the Niuas, and to expand these services to other remote rural areas.

Niuafo‘ou and Niuatoputapu. “If we operate as a commercial bank, we will be moving away from our mandate as a development bank,” he said. This would mean that, “no financial institute will be funding developing projects, particularly high risk ventures.…We would be just the same as commercial banks, which look only at profitable commercial ventures.”

Afu said that the TDB was benefiting from a lot of assistance from overseas sources, “but this assistance may cease if we operate as a commercial bank.”

Afu said that when the Bank of Tonga withdrew from the two Niuas in 1995, the TDB then offered saving accounts there, as part of the government Savings Mobilisation initiative, a service that Afu said could expand to other rural areas as the commercial banks were focusing their operations in town centers.

Afu anticipated that there would be many financial services needed in the rural areas, for instance, to operate a Post Office and to accept savings. He said that to cater for these growing needs TDB staff visited Nomuka, and Ha‘afeva in the Ha‘apai group once a month, and the need for these services would grow as the commercial banks’ operation became more focused in town centers, and were introducing digital banking and ATM to carry out routine transactions.

The Government of Tonga became the sole shareholder of the Tonga Development Bank in 1995 when the Bank of Tonga sold its shares worth $375,000 to the Government. Afu said that the board of directors of the Bank of Tonga came to regard their involvement in the TDB as a conflict of their interest, and, secondly, because their return from their investment was too small to justify their investment at the time.

The Tonga Development Bank celebrated its 25th birthday in Nuku‘alofa on September 2.

Meanwhile, the Bank of Tonga has changed its name to Westpac-Bank of Tonga, to be followed with the introduction of its $3 million investment in a high-tech banking system.

These are strategic moves by the two banks to take advantage of a shake-up in the economy, and to exploit the introduction of digital technology into banking in Tonga. The ANZ Bank was the first to introduce ATM and digital banking to Tonga last year.

Although the amendment by Parliament to the Tonga Development Act on September 5, allows the TDB to carry out commercial activities, the General Manager of the Tonga Development Bank, Afu‘alo Matoto, stressed that the bank, based in Nuku‘alofa, had no intention to provide commercial banking as a nation-wide service. He said that the amendment was simply to allow the TDB to continue offering the service of saving accounts in