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Tuesday, July 23, 2013

Disclose losses in Indonesian bank dealings, Maybank told


Maybank Berhad needs to come clean on its dealings in Indonesia’s Bank Internasional Indonesia (BII) which could result in as much as RM1.74 billion in losses and impact Malaysia's banking system, claims DAP MP Tony Pua.

The Malaysian-owned bank paid RM8.25 billion for a full stake in BII in 2008.

The deal was said to be overpriced at four times BII's asset value but was then vigorously defended by Bank Negara.

"We are concerned because even when there was a furore, everyone (in the government) had defended the deal, " Pua told reporters at DAP HQ this morning.

Last month, Maybank said that it has sold 9 percent of BII, to meet a regulatory requirement to pare down its stake.

Details of the deal were not revealed but he claimed it resulted in immediate losses of RM157 million, if based on reports in The Edge which said that Maybank sold to an undisclosed party at Rupiah 355 per share. This compares to its acquisition price of Rupiah 455 per share. BII’s shares have also fallen sharply over the last five years. Last week, the shares were traded at Rupiah 315 on the Jakarta stock exchange.

Maybank has been trying to dispose of a 20 percent stake in BII to meet Indonesian stock market regulation and now has to pare down at least another 8.3 percent stake by end 2013.

Maybank had last reported that the BII asset may carry an impairment of RM1.62 billion its annual report for the year ended December 2012. This is sharply higher than previously reported, Pua said, citing that Bank Negara officials had defended the deal to a Public Accounts Committee (PAC) in November 2008 and had then estimated that losses would be “in the region of RM300 million” if conditions don’t improve. 

Pua said that extrapolating from the losses from last month’s 9 percent sale, Maybank may be carrying a total RM1.74 billion paper losses on its nearly five-year-old BII deal. Furthermore, BII has shown “abysmal” return on investments for Maybank. Pua cited that returns were -0.17 percent, 1.86 percent, 2.31 percent and 6.27 percent respectively from 2009 to 2012. 
'Disclose BII dealings'

Pua urged Finance Minister Najib Abdul Razak to personally look into the matter, whether the cause of the alleged losses was “a bad business decision” or reckless abuse of power. He also urged Maybank to fully disclose its BII dealings for the sake of public accountability. 

“There is already a set of measures which govern the bank. Maybank have complied minimally... they have announced that they have sold their shares but they need to give us fuller details,” Pua said.

The purchase of BII is Maybank's biggest overseas acquisition to date. The deal was finalised under Abdul Wahid Omar, who served as Maybank’s president and chief executive officer from May 2008. Abdul Wahid resigned from Maybank in June and was made a senator and appointed as Minister in the Prime Minister’s Department in charge of Financial Affairs.

Despite pressure from Indonesian authorities, Maybank had previously said that it would not sell stakes in BII at a loss and has asked for several extensions to its sale deadline.

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