Azman Hashim does not discount buying ANZ stake in AMMB

Stake value: Azman

KUALA LUMPUR: AMMB Holdings Bhd's second largest shareholder Tan Sri Azman Hashim does not discount the possibility of buying Australia and New Zealand Banking Group Ltd's (ANZ) stake in AMMB.

Azman, who is the chairman of AMMB, when asked about ANZ's intentions to sell its 23.8% stake,  replied that he could not comment on it.

When asked if he would be interested to buy ANZ's stake: “I guess so if ANZ is selling, then one of the options will be that (about him buying the stake).”

Earlier in May, ANZ provided A$260mil (RM773.07mil) as impairment losses on its stake in AMMB in its latest result, sending yet another clear signal of its intention to dispose of the stake.

According to ANZ’s 2015 annual report, the value of its stake in AMMB was booked at A$1.424bil (RM4.23bil). With the impairment, the value is now estimated at A$1.16bil (RM3.46bil), which is still above the market value of its 23.8% stake in AMMB based on May 3's closing price.

“ANZ’s write-down of its stake in AMMB reflects a value that is closer to the market price of its investment in the Malaysian bank. Normally, investments are written down closer to the market price when the asset is up for sale,” StarBiz quoted an investment banker as saying.

Recall that ANZ is the single largest shareholder in AMMB, the sixth-largest banking group in Malaysia, and speculation of its plans to divest its stake in the Malaysian bank has been going on for some time.

The official reason is that the banking group has been under increasing pressure from its shareholders to improve returns from its underperforming Asian assets.

It had completed a series of corporate exercises to emerge as the biggest shareholder in AMMB in 2007. It first bought into AMMB in late 2006 after it paid A$383mil (RM1.2bil) or RM2.99 per share for a 13.5% equity stake in the bank.

It later increased its stake in the bank to 23.7% and had stated that it was looking to increase its stake to 49%. However, Malaysia has a 30% limit on strategic foreign shareholdings for commercial banks, although the limit can be raised on a case-by-case basis.

ANZ is said to have paid an average of RM3.63 a share, or RM2.58bil, for its stake in AMMB over two tranches. This translated into a price-to-book (P/B) of 1.96 times for AMMB then, which was in line with the average valuation of 1.91 times P/B of banking mergers at that time.