The Chairman of the National Reserve Bank Board of Directors Steve Edwards told Matangi Tonga Online on July 9 that the main shareholder is a Chinese businessman residing in China. HRH Princess Pilolevu Tuita is also shareholder while a Board of Directors will oversee the operation of the bank, including Tongans ‘Aisake Tu‘iono and Mishka Tu’ifua with other Chinese directors, he said.

 

"This is a foreign investment in Tonga and the bank considers there would be a lot of money injected into the economy. The most important issue I am concerned with is the fact that there is no economic activity and we need foreign investment since the economy now is stagnant and stale."

 

 

He said the new bank had a lot of business backing behind the main shareholder, which they looked at during the application process.

 

"The main criteria we considered was the benefit the country will get out of this investment and the benefit side outweighs the negative," he said.

 

"We have given them five to six months to set up. The minimum capital structure required to start a bank is $2.5 million but they have already got $8 million in a local bank here in Tonga. They are going to inject more capital into the economy starting next week as they start setting up its premises and banking system as required under the law," he said.

 

He said some of the current banks have set conditions for lending money that made it difficult for anybody to borrow under the current economic circumstances.

 

"The new bank is expected to offer a six percent interest rate. A lot of the businesses are paying up to 10-13 percent interest rate, which means they can’t improve or grow and all they are doing is servicing debts. We need to have the interest rate down so they can breathe and be able to take out more investment to try and expand their businesses, which will create employment and demand in the economy," he said.

 

 

He said one of the biggest problems Tonga faces is the high rate of unemployment.

 

"As far as we are concerned there is no economic activity, we are at a standstill. We need to energise the economy and the new bank coming in will certainly make competitive offers, and as a result other banks will have to compete in a way we may be able to see some movement in the economy," he said.

 

He believed that Tonga cannot continue to rely on grants. 

 

"I prefer to push the economy forward because there is no use being a chairman of the National Reserve Bank Board and not do anything about getting the economy moving, which is why I am in favour of this new bank. I am certain in due course we will see the economy move which is good for the country," he said.

 

A locally registered company the Pacific International Commercial Institute made the application for the license to operate the commerical bank. The license certificate was issued to 'Aisake and Mishka on behalf of the shareholders, at the National Reserve Bank in Nuku'alofa.

 

One of the National Reserve Bank's core functions is to undertake licensing and supervision of banks under the National Reserve Bank of Tonga Act.

 

Other banks in Tonga are the Tonga Development Bank, Westpac Bank of Tonga, ANZ Bank, and MBf Bank.