MBSB-AFB merger on track, valuation being negotiated


  • Business
  • Monday, 15 May 2017

MBSB president and chief executive officer Datuk Ahmad Zaini Othman (pic) said the non-bank lender was in the midst of formulating reports and negotiating the valuations for the merger.

KUALA LUMPUR: The merger and acquisition talks between MALAYSIA BUILDING SOCIETY BHD (MBSB) and Asian Finance Bank Bhd (AFB) are on track with the only concern being valuation.

MBSB president and chief executive officer Datuk Ahmad Zaini Othman (pic) said the non-bank lender was in the midst of formulating reports and negotiating the valuations for the merger.

“We have completed the business plan as well and what’s pending is the sales and purchase agreement, which will include valuation (pricing),” Ahmad said on the sidelines of a shareholders’ meeting last Friday. Ahmad is more confident of seeing the merger through this time because it is with a smaller financial institution.

“I am not going to give up. I believe it shouldn’t be difficult this time around because it’s with a smaller bank.

“We do care about the company and this is a good opportunity for us,” said Ahmad, adding that once the merger was completed the new bank would be worth about RM45bil in asset size. AFB’s asset size stood at over RM2bil.

On whether there were any resistence from shareholders, Ahmad said that in general they (shareholders) were supportive as MBSB had explained that the route towards a merger was a better and most logical choice.

However, an EGM will be held for shareholders’ approval. In the meantime, Bank Negara has given June 22 as the deadline to conclude the transaction.

Meanwhile, Ahmad expects MBSB’s impairment programme to be concluded by year-end.

“This is on track as we remain focus in the programme to strengthen the company towards achieving its future direction.

“It’s also a way for us to conform within the industry’s standards as we look to move into banking status,” Ahmad noted.

He said the company has plans in place for the implementation of the International Financing Reporting Standard (IFRS) 9

“We would take advantage of the resources.

“For the last two and half years we have already been burdened by huge impairments and the bulk of it are from operating profit. We are used to hard times,” Ahmad said.

IFRS 9, which will set new accouting standards for banks, will take effect next year.

The non-bank lender’s RM777mil impairment was 70% of RM1.12bil in operating profit.

In terms of retail and corporate financing, MBSB is optimistic of achieving a 30:70 ratio this year, versus 20:80 last year.

“Over the last two years, our transition towards the corporate segment mainly in property financing and equipment financing in the small and medium enterprises segment are seeing results.

“We will be targeting aggressive growth in 2017,” he noted.

MBSB has also set a target of 6% to 7% overall loan growth this year, versus the 3% to 4% of last year.

Ahmad said this could be achieved by revisiting existing corporate clients who were submitting their second proposals.

MBSB’s total assets stood at RM43.27bil as at Dec 31, 2016 from RM41.09bil a year ago.

The growth was attributed to increase in net financing and loans as well as liquefiable assets.

It told research houses in February that its target for 2017 will be to disburse additional financing totalling RM3.46bil, which includes loans for affordable housing projects.


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