KAF Group will not buy a 30% stake in Affin Bank Bhd, a wholly-owned subsidiary of Affin Holdings Bhd (AHB). However, it is still in talks with Malaysia International Shipping Corp Bhd (MISC) to acquire 36.8% of Affin Merchant Bank.
In a statement to the KLSE, AHB said the banking group and KAF group had mutually agreed to abandon negotiations on the proposed subscription to a 30% equity interest in Affin Bank.
AHB did not give any reasons for terminating the talks, which began in February last year.
It noted though that KAF Group's proposed participation in Affin Merchant may be expected to add positive value to the existing profitable merchant bank and AHB group''.
The latest developments show KAF Group's intention to be an investment banking group, which does not really need a commercial bank. KAF is the country's largest bond and money market trader.
AHB group managing director Datuk Lodin Wok Kamaruddin has said that with or without KAF, the group expected to sell the 30% stake in Affin Bank by year's end.
AHB recently injected RM100mil into Affin Bank to raise the commercial bank's paid-up capital to RM1.01bil from RM909.6mil previously. The capital injection was via subscription to 100 million new shares in the bank.
Affin Bank's risk-weighted capital ratio is estimated to have improved by 0.6% to 9.1% (excluding profit in the financial year ended Dec 31, 2002), after the injection.
The commercial bank returned to the black in the nine months to Sept 30, 2002, thanks to a drop in loans loss provision. It posted a pre-tax profit of RM18.1mil for the period, compared with a pre-tax loss of RM475.1mil a year ago.
Affin Merchant's pre-tax profit for the nine months ended Sept 30, 2002, rose to RM31.6mil from RM30mil previously.
Last Monday, Bank Negara gave the approval for MISC to initiate talks on the sale of a stake in Affin Merchant to KAF Group.