CEO: Maybank in no hurry to pursue another acquisition
Source: 17-MAY-2008 Intellasia | The Star Online
May 17, 2008 - 7:00:00 AM After announcing three acquisitions recently, Malayan Banking Bhd (Maybank) is not in a hurry to pursue another.

"We are so busy with these transactions that we're not looking at anything else. Our priority is to complete these three acquisitions," president and chief executive officer Datuk Seri Abdul Wahid Omar said after the company EGM yesterday.

In the past three months, Maybank had proposed to buy An Binh Bank of Vietnam, Banking International Indonesia (BII) and Pakistan's MCB Bank for a combined cost of almost RM12bil.

With these acquisitions, Maybank's regional role would be boosted significantly with its presence in seven of the 10 Asean countries.

Wahid said India and Thailand were potential countries to penetrate although the banking group was "not in a hurry".

Maybank, he said, would continue to expand organically, such as adding more branches to the two it had in Cambodia.

Its shareholders approved the proposal to take over BII yesterday after Maybank presented the rationale for the move as well as the overall strategy in its aspiration to become a leading regional banking group.

The results of the meeting mean "the shareholders voted in our favour," Wahid said.

Indonesia, being the largest nation in South-East Asia with some 130 million populations, provides a large market with high growth potential, given its low banking penetration.

Furthermore, BII fitted the group's criteria as it has a good franchise of 230 branches and a strong management team.

"There is also the element of scarcity as BII was the only one available for acquisition among the top 10 banks in the country," Wahid said.

Maybank would be paying 510 rupiah per BII share, which was "not much higher than the next highest bidder," he noted.

In determining the bidding price, the group had set a valuation range based on discounted cash flow. The price of 510 rupiah is at the top end of the range.

After this, Maybank would be seeking approval from the Indonesian authorities as well as clarity on the country's single presence policy, which prevents controlling shareholders from having stakes in more than one bank in Indonesia.

There was concern earlier that Maybank and CIMB group, being government-linked entities, would be subject to the single presence policy.

As the two banking groups did not share the same shareholders, the policy did not apply to Maybank, Wahid said, adding that the BII acquisition was expected to be completed by end-June or early July.

On recent criticism on the BII acquisition, he said Maybank would explain the rationale of the BII deal in Parliament soon.

Meanwhile, he said, the proposed acquisition of MCB demanded a premium due to its position as the fourth largest bank in terms of assets and biggest in market capitalisation in Pakistan.

MCB also enjoyed a high net interest margin of 8% compared with the industry's average of 6%, he added.

Maybank reiterated its commitment to paying out 60% of net profit as dividends. Wahid said the final dividend would be announced in August together with its full-year results.

The group planned to release its optimum capital structure plan by end-June, he said, adding that it intended to achieve an ideal risk weighted capital ratio of 11% to 12.