'Uncertainties' lead to Australian bank dumping plans for Nauru's only branch

Crisis-riven Nauru has suffered another blow - with an Australian bank abandoning plans to open what would have been the only branch on the tiny Pacific nation.

There are no banks on Nauru, host to an Australian-run immigration detention centre, operating a cash economy that uses Australian currency.

Bendigo and Adelaide Bank had been in talks over several months to open a branch for the island's 10,000 residents, with Nauru's government pledging it expected a bank to open this year.

But a spokeswoman said: ''Uncertainties have surfaced during the course of this work and at this point in time the bank has decided not to proceed with establishing a community bank branch.''

A legal crisis engulfed Nauru in January after the government deported the nation's only magistrate and banned the chief justice from returning.

Bendigo Bank said at the time it was monitoring events but did not specifically cite Nauru's legal woes when confirming the branch would not go ahead.

The bank said it would return to the Pacific nation ''in the coming weeks'' to gauge interest in establishing what it calls an agency – a type of kiosk for banking services that operates within an existing business.

Nauru's economy has surged in the past 18 months since the Gillard government again opened a detention camp on the island. But residents have been frustrated without banking services since 2006 when the debt-ridden Bank of Nauru was shut.

Bags of cash are regularly flown from Brisbane to Nauru to bolster currency supplies on the island and pay government workers.

The new bank was highly anticipated as the government has promised a payout of pending salaries, superannuation and personal savings from former Bank of Nauru accounts.