The Pacific International Commercial Bank (PICB), a Chinese-Tongan venture, had its license revoked because it failed to honour a business plan, and had not submitted an audit report, the National Reserve Bank of Tonga Governor Dr Ngongo Kioa said in Nuku'alofa today.

It is the first time the Reserve Bank has revoked a bank's license in Tonga.

The Governor said PICB had presented and promised to adhere to a business plan when they applied for their license. 

"PICB's business plan when presented was fine. It showed us a different stream, a niche product that would bring into Tonga USD $100 million for lending to people. This was presented to us during a time when Tonga was in a bottleneck state because banks were not lending, which concerned many businesses and people at this time," he said.

The Governor said they thought this might be an opportunity for Tonga and issued a license on the understanding they would bring this money to Tonga from abroad and lend it out on a competitive interest rate or less.

"However, this did not happen and we warned them in late 2014 and lifted this notice in April 2015. We explained to the PICB chairperson and directors in a letter this was their final opportunity to honour their business plan and other restrictions. That is 14-months to date but they asked for another 10 days when we served this on them," he said.

“If they weren’t able to do anything in 14-months ... how can they bring $100 million in 10 days? The reason why we revoked the license because they departed from their business plan and they were incurring much loss to the county.”

He said this loss was in regards to PICB's operating loss because it had no revenue and was not lending because they did not bring in the money so they depended on people's deposits. In addition, we have not received any audit report from them, he said.

The Governor said this was the right time to revoke their license and minimize this loss.

He said they had extended to PICB respect and trust that they would honour their business plan.

He said it is the job of NRBT as the regulator and his job as Governor to implement the decision by the Board who have done their homework, to revoke their license immediately. 

"What is important now is to inform those who have balances with PICB the procedure to regain their money. We have publicly announced this," he said.

A company, Nuku'alofa Investment had previously filed for PICB's liquidation and was "a signal of their struggle", he said.

The Tonga National Reserve Bank Board of Directors include chairman Steve Edwards, ‘Uhila Liava’a, Sinai Tu'itahi, Lisiate Prema, Secretary of Finance and the NRBT Governor.

PICB

The PICB situated at Loumaile Lodge in the Central Business District was in operation for just over two-years since it was opened on April 7, 2014 by King Tupou VI.

The bank when opened was reported to be a partnership between a Chinese businessman and majority shareholder Mr Jianhua Hu, who was present at the event with Princess Pilolevu Tuita. The other shareholder was Mr Zhang Xueyan.

The Board of Directors had consisted of six people headed by Ms Tiantian Hu, the chairlady and daughter of the main shareholder, with Ms Jianhua Hu, Ms Mimi Hu, Ms Shanshan Hu and two Tongans ‘Aisake Tu'iono and Mishka Tu’ifua.

The bank had been in financial troubles because in January last year an application to appoint a liquidator for its liquidation was mentioned at the Nuku'alofa Supreme Court.

When it was awarded its license by the National Reserve Bank in July 2013, PICB operated as the fifth bank in Tonga.