CIMB, Maybank Jakarta shutout ploy to force BNM’s hand

By Shannon Teoh

August 05, 2011

Maybank would need to dump RM5 billion worth of shares to meet the new ruling. — file pic

KUALA LUMPUR, Aug 5 — CIMB and Maybank may be forced to sell their lucrative stakes in Indonesia’s Bank Niaga and Bank Internasional Indonesia because of Bank Negara Malaysia’s refusal to grant a full commercial licence to Indonesia’s biggest bank.

Jakarta plans to slash the cap on foreign ownership of banks from 99 to 50 per cent, hitting Malaysia’s two biggest lenders the hardest, in what appears to be a retaliatory move to force Bank Negara to rethink its refusal to grant the licence to Bank Mandiri.

“It’s not fair and I am frustrated. Everyone wants to get into Indonesia. They need us more than we need them,” the Financial Times quoted Zulkifli Zaini, the head of Bank Mandiri, as saying today, in reference to the regulatory barriers Indonesian banks have faced in their efforts to expand across Asia.

There are between two and three million Indonesians working in Malaysia to whom Mandiri has sought to provide banking services.

The Bank Indonesia ruling — which has no implementation date as yet — will in turn put a crimp on CIMB’s and Maybank’s regional ambitions.

The ruling would cost CIMB a large stake in the bank that provided a third of its profits last year.—Reuters pic

Both were recently engaged in a bidding war to take over RHB Bank, which would have made the winner the biggest bank in Southeast Asia.

But they were thwarted after Abu Dhabi Commercial Bank sold its 25 per cent stake in RHB to its sister company Aabar at RM10.80 per share, setting a benchmark that both banks felt was too high.

The latest move by Indonesia’s central bank will further dent their plans, possibly leaving the two banks cash-rich but shut out of the region’s fastest growing economy.

CIMB currently controls 98 per cent of Bank Niaga, Indonesia’s fifth-largest bank, while Maybank owns 95 per cent of Bank Internasional Indonesia, the republic’s eighth-largest financial institution.

If both banks are to cut their stakes to 50 per cent, CIMB will find itself with an extra RM7 billion in hand based on current market value but lose half its interest in Bank Niaga, which contributed a third of its pre-tax profits last year.

For Maybank to meet the 50 per cent cap, it will have to sell RM5 billion worth of shares at current prices.

Uncertainty over Bank Indonesia’s ruling has already scuppered Affin Holdings Bhd’s plans to acquire an 80 per cent stake in Bank Ina worth RM138 million.

Ties between Putrajaya and Jakarta have been cool in recent years after Malaysia froze in 2009 the recruitment of foreign labour, the majority of whom come from Indonesia, before reopening its doors earlier this year.

Indonesia had in turn stopped its domestic workers from working in Malaysia following reports of abuse.