MBSB confirms mulling merger with Asian Finance Bank

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) has confirmed that it is eyeing a potential merger with Middle Eastern institutions-owned Asian Finance Bank Bhd (AFB).

In a filing with Bursa Malaysia on Wednesday, the financial services provider said Bank Negara, through a letter dated Dec 21, stated that it had no objection in principle for MBSB to begin negotiations with the existing shareholders of AFB.

AFB’s shareholders include Qatar Islamic Bank (the biggest shareholder with a 66.67% stake), RUSB Investment Bank Inc (16.67%), Tadhamon International Islamic Bank (10%) and Financial Assets Bahrain WLL (6.67%).

MBSB said the negotiations must be completed within six months from the date of Bank Negara’s letter.

“Further details of the proposed merger will be announced in due course,” it added.

The mortgage provider, which has been trying to transform into an Islamic financial institution to boost its competitiveness, aborted its proposed merger with Bank Muamalat Malaysia Bhd -- which is owned by DRB-Hicom (70%) and Khazanah Nasional (30%) -- early this year to create Malaysia’s largest standalone Islamic bank.

“After a series of discussions and negotiations, DRB-Hicom, MBSB and Khazanah have not been able to reach an agreement on the terms and conditions of the proposed merger.

“Accordingly, the parties have mutually agreed to end all discussions and not proceed with the proposed merger,” MBSB said in a filing with the bourse.

MBSB was also part of the failed three-way merger with CIMB Group Holdings Bhd and RHB Capital Bhd that was called off early last year amid falling oil prices.

AFB, which only has a branch in Kuala Lumpur and Johor Baru, and a representative office in Jakarta. had not been successful in finding a merger partner as well.

It was reported that its shareholders aborted negotiations to sell AFB to Permodalan Nasional Bhd-owned Malaysian Industrial Development Finance Bhd.