Temasek’s plan to buy Alliance Bank hits new snag

  • Business
  • Wednesday, 10 Nov 2004

THE months-long effort by Singapore government-owned Temasek Holdings Pte Ltd to buy a substantial stake in Alliance Bank Bhd has hit a new bureaucratic snag, the Asian Wall Street Journal (AWSJ) reported. 

But the development is not likely to derail the deal, the report added, citing Malaysian Government officials.  

The latest hitch reportedly centres on an objection by Bank Negara to Temasek’s proposed Malaysian partners in the acquisition: businessman Nizam Abdul Razak, who is the brother of Deputy Prime Minister Datuk Seri Najib Abdul Razak, and Yahya Awang, a heart surgeon.  

The AWSJ report said that according to people following the situation, Bank Negara would prefer to see Temasek teaming up with Malaysian institutional or corporate investors rather than individuals to buy into Alliance Bank, a wholly owned unit of Malaysian Plantations Bhd (MPlant). 

“It’s simply about being prudent,” said a local banker familiar with the central bank’s position on the proposed Alliance Bank purchase. “Institutional investors have deeper pockets, particularly in times of crisis.”  

A Bank Negara spokesman declined to comment, saying the central bank did not discuss matters relating to specific financial institutions. But a senior Government official said Kuala Lumpur wanted the proposed investment to proceed, adding that “we are confident that a technical solution can be found.”  

Earlier this year, Temasek and its Malaysian partners had submitted a plan to Bank Negara to acquire a stake in Alliance Bank by purchasing 30% of MPlant, the bank’s holding company.  

Bankers familiar with the proposal said Temasek was prepared to pay more than RM930mil for the stake, or about RM2.60 a share.  

But a string of obstacles has held up the acquisition, prompting anxiety among some local and foreign banking and securities industry executives about the Government's commitment to open up the domestic-banking sector to more foreign participation. Business analysts also suggested that Temasek’s investment in Alliance Bank could presage increased corporate activity between Singapore and Malaysia. 

“We thought it was a done deal,” said a Malaysian banking executive of Temasek’s plan to invest. He expressed concern that the delays “don’t send a good message” to potential investors. 

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