The ‘face’ of second largest banking group prepares to exit to set up own fund
CIMB Group chairman Datuk Seri Nazir Razak, a seasoned banker and the face behind the country’s second largest lender, will leave the banking group.
The question is whether he will stay until the end of his current term which ends in March next year or exit the bank earlier than that.
Sources say Nazir has informed the CIMB board of directors that he will not be seeking a re-election as the chairman of the banking group and will leave when his term finishes next March.
“He (Nazir) has told the board that he will leave and not seek re-election. The board is already searching for a successor,” one source says.
The 52-year old avid social media user who describes himself on his Instagram account as a “semi-retired banker” is the youngest brother of former Prime Minister Datuk Seri Najib Razak who was ousted in the recent General Elections.
While there is talk that Nazir could leave earlier than March, the source says so far, there has been no indication of him being “told to go”.
“He has not been called in by the Council of Eminent Persons (CEP) or anyone else,” says the source.
The CEP is headed by Tun Daim Zainuddin and was set up to advise the new Pakatan Harapan government on how to achieve its economic promises in 100 days as per its election manifesto.
Among the promises is to look into government-linked companies (GLCs) and review a few things at these entities including the salaries of GLC heads, company performances and the appointments of key executives.
A few CEOs at GLCs as well as Government-Linked Investment Companies or GLICs have already vacated their positions.
The most high profile position to be vacated thus far is Tan Sri Abdul Wahid Omar’s position. Wahid was chairman of the country’s largest fund management company, Permodalan Nasional Bhd.
He has been replaced by former Bank Negara governor Tan Sri Zeti Akhtar Aziz.
Meanwhile, sources close to CIMB say that Nazir is prepared to go earlier than the expiry of his chairmanship - if he is told to do so.
“His (Nazir’s) position is clear. If the new administration wants him to leave before his term ends, he will go,” says one source.
In recent years, Nazir has been spending a lot of time in London where his family is based and where he has private businesses including a restaurant.
“Nazir remains a relatively respected banker notwithstanding the 1Malaysia Development Berhad (1MDB) fiasco that has tainted his brother and by default, him.
“He has as what they say, a nose for deal-making,” quips the source.
As it stands, it appears he will be putting those skills to some use, moving on to spearhead a regional private equity fund, an idea which he has been working on with some of his ex-CIMB associates, since last year.
It is understood that the fund is seeking to raise as much as US$1bil (RM4.04bil) and has already attracted some interest from a couple of local high-net worth individuals.
In an interview with Bloomberg Television in Jakarta late last year, Nazir had said that he was considering plans to set up a private equity fund at a time when cross-border deals in Southeast Asia offered “exciting opportunities”.
The fund reportedly will have five partners, one of whom will be Kenny Kim, who previously worked under Nazir as chief financial officer at CIMB.
Nazir became CIMB chairman in 2014 after stepping down as the bank’s CEO.
At 48 then, he was one of the youngest chairmen among financial institutions in the region.
He had served as CIMB CEO for 15 years, during which he helped grow the banking group via a series of mergers and acquisitions.
He also oversaw the group’s regionalisation strategy which enabled it to expand across the region.
Critic of 1MDB
One of Nazir’s “trademark” deals during his tenure as the boss of CIMB was the 2005 acquisition of sister company Bumiputra-Commerce Bank which helped the lender morph into the country’s second largest bank after Malayan Bank Bhd.
That same year, CIMB also acquired one of Singapore’s biggest stockbroking groups, GK Goh Securities for some S$239mil (about RM707mil), paving the way for the lender to immediately scale up its operations in the highly competitive but lucrative Singapore market.
While his decision to not seek re-election seems to be coming at a time when fellow GLCs are under a review - some for their alleged mismanagement and overpaid CEOs - industry observers point out that Nazir had already indicated “some time back” that he wanted to move on to other things.
Away from his work, Nazir is known to be fairly outspoken and frank about a variety of issues including politics and education.
When his brother was in power, he had often voiced his criticism on some of the country’s policies, earning him both admiration and rebuke from diverse quarters.
He was also a strong critic of 1MDB, the fund that built up a whopping debt of RM42bil within a space of five years, debt that cannot be accounted for.
There are currently ongoing global investigations into the money trail of 1MDB and Najib is facing potential charges of receiving money from the debt-laden fund.
As a matter of principle, CIMB had never participated in any of 1MDB’s dealings.
“Nazir’s officers were told to strictly comply by the guidelines to “not touch” anything, or deal in any transaction, involving 1MDB,” says a banking official.
Right after Najib lost power last month, Nazir said in an interview with Bloomberg that “the big noisy element was the 1MDB crisis and on hindsight, 1MDB has led to a lot of other things”.
“Malaysians have voted loudly and clearly for a change in government,” he had said.
Privately, Nazir had told close friends that he was happy about the birth of “a new Malaysia”.
Cleared by Shamsiah, Tommy
Still, in April 2016, Nazir was dragged into a scandal about political funding and alleged misuse of money after it was revealed that his brother Najib transferred a sum of about RM28mil (equivalent to US$7mil) into his account in the run-up to the 2013 general election (GE13).
The money, which was said to be from 1MDB, was disbursed to several people on behalf of Najib.
The banker then went on a voluntary leave of absence from his role as CIMB chairman amid an independent review on the matter and criticism from many quarters.
The bank had engaged Ernst & Young to conduct an audit on the issue. The findings of the inquiry were then submitted to Bank Negara.
CIMB had also obtained independent legal advice supposedly at the behest of its major shareholder, Khazanah Nasional Bhd.
People in-the-know say the law firm which provided the independent legal advice is the firm in which Tommy Thomas who was recently appointed as the Attorney General (AG), is the main legal practitioner.
“Thomas was investigating if Nazir had violated any laws such as the Anti-Money Laundering Act (AMLA),” says one source.
Even Bank Negara undertook a probe on the matter and at that time, the investigation was headed by Datuk Nor Shamsiah Mohd Yunus, who is the new Bank Negara governor.
“Nazir was cleared by the current AG and current Bank Negara governor. The inquiry established the fact that there was no way Nazir could have known then that the money was part of 1MDB’s funds,” says the source. Nazir returned to his role as chairman about a month later after the findings from the review concluded that he “did not misuse his position as group chief executive at the time nor was there any inappropriate use of the bank’s resources.”
To be sure, while the findings had cleared Nazir, it also revealed that the bank fell short in its compliance of some processes.
For example, there was no suspicious transaction report (STR) made when the US$7mil fund was transferred to Nazir’s personal bank account via a cheque.
It is believed that Bank Negara had fined CIMB for failing to file the STR.
Prior to all this, Nazir had clarified that the transfer of the US$7mil was a normal banking transaction that any high net-worth client was entitled to.
He had said that his brother had given him a cheque for US$7mil and the funds were meant to be disbursed to some people as part of GE13, adding that he knew his brother was receiving donations and that he (Nazir) had no reason to suspect anything out of the ordinary.
Under AMLA however, bank officers must supposedly raise questions when source of funds for any deposits are in excess of RM50,000.
Following the incident that was highly publicised in both local and international media, the CIMB board instructed management to put in place plans for immediate improvements to strengthen internal rules and processes to avoid re-occurrences.
As at Feb 28, Nazir had some 43.63 million CIMB shares representing a 0.47% stake and translating to a value of about RM238mil based on the current share price of RM5.45.
The CIMB stock has suffered its fair share of brunt following the outcome of the recently-concluded elections.
From then till now, it has lost more than 16% in value, partly due to overall weak markets in Asia.
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