Resignation of CEO may delay BIMB’s reorganisation

Yesterday, CGS-CIMB Research said Khairul

PETALING JAYA: The resignation of BIMB Holdings Bhd CEO Khairul Kamarudin could see some of the group’s initiatives or plans delayed or shelved, say analysts.

While potential restructuring of the banking group has been talked about since 2015, it has been speculated recently that it could happen in the near future.

However, with the departure of the group’s CEO, it may be delayed once again.

BIMB Holdings announced on Friday that its CEO had resigned from his post with immediate effect.

The group said in a statement Khairul had also relinquished his position as the CEO of BIMB Holdings’ unit, Bank Islam Malaysia Bhd.

It has been widely speculated that BIMB would undergo a restructuring, where the financial holding company structure is replaced, with Bank Islam taking over.

In a report last week, RHB Research painted a scenario of a possible rights issue exercise to raise funds for a restructuring at BIMB.

However, sources said fund-raising was only one of the options being considered by the group.

“This exercise has been going back and forth between shareholder Lembaga Tabung Haji (LTH) and the group for a few years, but it has not really taken off,” they said.

“This is because as compared to other financial holding companies that have been collapsed, BIMB has a sizeable takaful business in the form of Syarikat Takaful Malaysia Bhd (STMB), which is also listed and 60% owned by BIMB. Besides this BIMB also wholly-owns BIMB Securities.”

Yesterday, CGS-CIMB Research said Khairul’s resignation could be negative for the group in the short term as its key initiatives and plans could be delayed or shelved.

The research house said his departure from the banking group could also temporarily slow down its revenue growth, due to the delays.

It maintained its “hold” call on the counter, given the slowdown in loan growth and potential erosion in margins.

“However, the change in CEO could be neutral for BIMB in the longer term, in our view, as we do not expect this to lead to a drastic diversion in its strategic direction,” it said.

A report by UOB Kay Hian Research, however, expects a smooth transition following Khairul’s departure, with the overall financial performance to be largely unaffected, driven by STMB, which has its own management team.

“We also think that the possibility of major corporate exercises, such as a group restructuring that could involve the collapse of its holding company structure and a rights issue to raise money to repay its RM1.2bil sukuk, are largely driven by decision-making at the board level,” it said.

It also noted that Khairul’s resignation was a loss to the group as while he was only CEO for less than a year, he had been instrumental in revamping the group’s risk management system, resulting in a turnaround in operations on the back of lower NPLs.

In the bigger scheme of things, former Bank Islam CEO Datuk Seri Zukri Samat was recently appointed as LTH’s new CEO and former Securities Commission executive chairman Tan Sri Mohammed Nor Md Yusof as its new chairman.

“With Zukri’s appointment at the LTH level, it is seen as positive as the thinking will be a lot more aligned and synchronised as far as BIMB and Bank Islam are concerned.

“However, even if the reorganisation process were to start in the near future, it would take at least 12 months to complete,” said the source.

He said the exercise, if it happens, was likely to take place only next year or in 2020.

Shares of BIMB closed 3 sen up to RM4, giving the stock a market cap of RM6.77bil.

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