An Australian bank, the Bank of New South Wales, established branches in Port Moresby and Samarai, in Papua, in 1910. In 1916 the Commonwealth Bank of Australia opened a branch in Rabaul, New Guinea. The Bank of New South Wales moved into New Guinea in 1926. Both banks closed when the Japanese invaded the territories in 1942. When they resumed operation after the war they were joined by other Australian banks. All banks operated under Australian banking legislation and in 1960 the Australian government set up a branch of the Australian Reserve Bank in Port Moresby.
The first indigenous Papua New Guinea bank, the Papua New Guinea Development Bank, established by Territory legislation, with capital provided from the Territory budget, began operating in 1967. By 1970 an integrated banking system provided for trading, savings, development and central banking. The Bank of Papua New Guinea was set up in 1973 to take over central banking functions from the Reserve Bank of Australia. The largest of the banks, the Commonwealth Bank of Australia, was wholly owned by the Australian government. In 1974 the Territory government set up the Papua New Guinea Banking Corporation (PNGBC) which took over the assets and operations of the Commonwealth Bank.
In 1993 commercial banks included the state-owned PNGBC, two Australian-owned banks (the Australia and New Zealand Banking Group and Westpac Bank), the Indosuez Niugini Bank and Niugini-Lloyds International Bank. In July 1993 the Bank of South Pacific became the first locally- and privately-owned bank when the National Bank of Australia sold its 87 percent holding to a PNG consortium.