30 May, 2008
by Sharon Tan, The Edge
Members of Parliament have continued to question Malayan Banking Bhd over its proposed acquisition of Indonesia’s sixth largest banking group, Bank Internasional Indonesia (BII).
During a lunch-break briefing for both Barisan Nasional and Pakatan Rakyat MPs in Parliament yesterday, Maybank’s chief executive officer Datuk Seri Abdul Wahid Omar was subjected to a barrage of questions and temperatures soared when the MPs felt that the answers were not forthcoming.
The issues ranged from the high price that Maybank is paying for the acquisition to why other larger banks had withdrawn their bids and whether Maybank would be able to meet Indonesia’s single presence policy (SPP).
The MPs came away from the one-nd-a-half-hour meeting dissatisfied, claiming that Maybank officials had not given clear-cut answers to their questions.
The briefing was held in response to the many questions pertaining to Maybank posed to the Finance Ministry during the motion of thanks to the King’s speech. The questions dwelt particularly on Maybank’s purchase of banks in Indonesia, Pakistan and Vietnam.
According to Jeff Ooi (Jelutong-DAP), who attended the briefing, the MPs zeroed in on the purchase of BII at 4.6 times book value and also on the SPP.
He said Wahid cited four reasons for the acquisition. “In order for a meaningful presence in Indonesia, they (Maybank) need a sizeable presence. For the time being, among the top tier banks, only BII is available,” Ooi told The Edge Financial Daily after the briefing.
Ooi said the MPs were told that Maybank had projected an erosion in earnings for the group in the first two years but this would turn positive in the third year.
He said the MPs also raised the role of the intermediaries in the transaction and whether ECM Libra group was involved.
“This was denied by the bank. Wahid said the transaction involved financial advisers from BNP Pariba (representing Maybank) while Temasek was represented by Credit-Suisse,” Ooi said.
He said there was still doubt as to whether Maybank would breach the SPP as CIMB Group already had a presence in Indonesia.
“According to Wahid, in Maybank’s last meeting with Bank of Indonesia, the response seemed to be ‘verbally positive’,” Ooi said.
He said Wahid admitted that the valuation of BII was at the top end. “Temasek would make a capital gain of RM2.6 billion for the bank (stake) it held the last nine years. Was the cost justified?” Ooi added.
Maybank would pay RM4.8 billion for a 55.6% stake and an additional RM4 billion for the general offer in BII, whose current market capitalisation stands at RM7.8 billion.
Ooi said some MPs threatened to show documents that allegedly showed the bid was by Maybank alone. “Maybank admitted that HSBC withdrew. Bank of China also withdrew,” he said, adding that one of the MPs claimed that HSBC withdrew following a due diligence.
Dr Mohd Puad Zarkashi (Batu Pahat-BN) said: “We are still in the dark about the issues that we raised during the debate in Parliament. One is the price. To us, it is too expensive.”
“Wahid could not explain to us why the other two banks, Bank of China and HSBC, withdrew from bidding. He tried to explain that the difference (in the bid) between Maybank and Bank of China was only five rupiah because they (BOC) offered 505 and Maybank 510.
“We are not convinced. There must be other reasons why Bank of China withdrew. We don’t think it was because Maybank offered more than Bank of China,” he said.
Mohd Puad said Wahid could not convince them because the exercise took place before he (Wahid) joined Maybank. “It seems to us Maybank did not get proper advice from the consultant. He admitted that they appointed a consultant but denied that it was ECM Libra,” he said.
“MPs in Indonesia brought up this issue (SPP) in their debate in parliament. They have requested the Indonesian government to interfere and not to allow Maybank to take over BII because they considered Maybank and CIMB Mohd Puad said BN backbenchers would seek a separate meeting with Maybank. He felt its officials might not have been able to disclose more at yesterday’s briefing because of the presence of Opposition MPs.
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