Hoping to cash in on a strong Australian market, Pacific Century Financial Corp. of Honolulu said it will boost its stake in Brisbane-based Bank of Queensland to 17%.

The move, which would more than double Pacific Century's position in the $1.8 billion-asset Australian bank, is priced at $23 million but is not intended as a step toward majority control, an executive said.

Regulatory hurdles and competitive markets make Australia a particularly unappealing place for cross-border takeovers, said David A. Houle, the chief financial officer at Pacific Century, which owns Bank of Hawaii.

"We have no interest in acquiring majority ownership," Mr. Houle said. "Australian customers are already quite well served by the banks down there."

But plans announced late Monday for the larger stakehold would strengthen a strategic alliance formed in 1998 and bolster Pacific Century's position in a growing Australian market.

"This gives us a better opportunity to develop synergies between our locations in the Pacific and Bank of Queensland's in Australia," Mr. Houle said.

Pacific Century, which has $14.9 billion of assets, first bought into Bank of Queensland in 1998, when it purchased $22 million of convertible notes. The two companies began sharing facilities, expertise, products, and services. Pacific Century also stationed a lending officer in Bank of Queensland's headquarters.

Queensland, which makes up the northeast of Australia, is attractive because of its strong growth, said Keefe, Bruyette & Woods analyst David H. Winton. Tourism drives much of the economy; the Great Barrier Reef is a major draw. Trade, mining, and mineral exports also play important roles. Bank of Queensland has 95 branches in the area.

Though the Australian bank also does some business in Papua New Guinea and elsewhere in the South Pacific, Mr. Winton said Pacific Century is increasing its ownership "because it wants a bigger piece of Queensland."

Mr. Houle declined to say whether Pacific Century plans to continue increasing its stake in Bank of Queensland.

The deal would help the Hawaiian company leverage its Pacific Rim network, which offers trade finance and payments services, Mr. Houle said.

Analysts interpreted the transaction, which is slated to close in the third quarter, as a sign of Pacific Century's renewed confidence in the recovery of Asia and the Pacific Rim economies.

"This is a continuance of Pacific Century's Pacific Rim strategy," Mr. Winton said. "There was a hiatus as Asia was going through its turmoil, but by all accounts that seems to be stabilizing."

Bank of Queensland has been experiencing solid loan growth, especially in mortgage and consumer lending. For the fiscal quarter ended May 31, the bank said, it originated $464 million of loans, a 24% increase over the same period a year earlier.

"This deal gives Pacific Century a greater stake in Bank of Queensland's success," said Joseph K. Morford, an analyst with First Security Van Kasper in San Francisco.

Terms of the deal call for Pacific Century to buy 5.8 million shares in Bank of Queensland at $3.94 a share. Half would be paid at closing and the rest by Feb. 27, 2001.

Bank of Queensland chief executive officer John Dawson said proceeds from the stock sale would fund continued growth.

"This stock investment by Bank of Hawaii will provide a source of capital that will assist us as we continue to build our business portfolio, particularly to small and medium Queensland enterprises," he said in a statement.

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