SINGAPORE (Reuters): The Republic’s biggest lender DBS is exploring expanding into Malaysia with potential acquisitions of stakes in banks in its South-east Asian neighbour, including in one of Malaysia’s smallest banks by assets, two sources said.
DBS Bank is exploring a purchase of Singapore state investor Temasek’s 29.1 per cent stake in Alliance Bank Malaysia, said the two sources with knowledge of the matter, a slice currently valued at about US$460 million (S$611 million).
Temasek is the biggest shareholder in DBS, with a 28.9 per cent stake, according to LSEG data.
Other options for expanding into Malaysia include buying Kuwait Finance House’s Malaysian retail banking assets, worth more than US$500 million and which have been put up for sale, one of the sources said.
Deliberations are in very early stages, however, the sources said, and any formal negotiations for an acquisition of a stake in a Malaysian bank would need approval from the Malaysian central bank, or Bank Negara Malaysia.
The two sources declined to be named as talks on the possible acquisitions were confidential.
“We do not comment on market rumours and speculation,” said a spokesperson for DBS, South-east Asia’s biggest lender by assets. Temasek declined to comment.
Alliance Bank, the second-smallest listed bank in Malaysia by total assets, and Bank Negara Malaysia did not respond to requests for comment after business hours on Nov 8.
Kuwait Finance House said the process for selling its retail banking portfolio in Malaysia was in the preliminary stages, and that it was not able to share additional information.
DBS is the only Singapore bank without a retail banking presence in Malaysia. Local rivals OCBC Bank and UOB both have retail banking operations in Malaysia.
DBS’ planned foray into Malaysia comes amid improving economic prospects for the South-East Asian nation, with new infrastructure projects and investments expected to result in a surge in credit growth.
In the second quarter, Malaysia’s economy expanded by an annual 5.9 per cent, its fastest in 18 months, on higher household spending, exports and investment. Its monetary unit, the ringgit, is South-East Asia’s best-performing currency in 2024.
DBS emerged as a regional banking powerhouse under outgoing chief executive Piyush Gupta’s 15-year tenure, bolstered by acquisitions that established a significant presence in markets such as China, India, Indonesia and Taiwan.
DBS completed the acquisition of Citigroup’s consumer banking business in Taiwan in August 2023. In July, Mr Gupta said DBS was looking for bolt-on acquisitions that would support further strategic expansion in the region.
Tan Su Shan, who heads DBS’ institutional banking group and is deputy CEO, will take over from Mr Gupta in March 2025, making her the first woman to lead the bank. On Nov 7, DBS posted its highest-ever quarterly net profit for July to September on record fee income.
DBS last attempted to buy Temasek’s stake in Alliance Bank in 2012. Those plans did not go through because of regulatory hurdles, according to sources at the time.
The current Malaysian government under Prime Minister Anwar Ibrahim has been more forthcoming and open to ideas and investments with an aim to boost economic growth, said the sources with knowledge of DBS’ plan for Malaysia. - Reuters
