Your MP’s Question of the Week #11

Maybank is Malaysia’s largest domestic bank. It is also a government linked company with the government having close to 60% control of the banking group’s assets.

Recently Maybank has disclosed that it intends to buy over Temasek Holdings’ (a Singapore government linked company) shares in Bank Internasional Indonesia (BII) for a premium of 4.6 times above its book value for a total sum of RM8.6 billion.

One of the reasons given for Maybank’s proposed purchase of Temasek Holdings shares in BII has been to give Maybank a foothold in the financial sector in Indonesia.

The Government or Bank Negara in particular has to weigh heavily on the following controversial issues with regard to the purchase and they are:

1. Maybank is buying the shares at a premium of 4.6 times above the book value;

2. This transaction is benefiting Temasek Holdings, a Singapore government linked company (and Singapore has just recently been given sovereignty over Pulau Batu Puteh by the International Court of Justice in The Hague);

3. Temasek Holdings will be making a capital gain of RM2.6 billion;

4. This transaction would likely be benefiting a consultant company with millions of RM in consultancy fees.

The question for this week then is:

Should Bank Negara stop Maybank from its proposed acquisition of Temasek Holdings’ shares in Bank Internasional Indonesia at a premium of 4.6 times above the book value to protect the minority shareholders, rakyat and country’s interest?

– Terjemahan oleh Lee Wee Tak – Ucapan ribuan terima kasih dari Wee Choo Keong –
 
Soalan Mingguan WR Anda #11

Maybank adalah bank terbesar Malaysia. Ia juga mempunyai hubungan dengan kerajaan di mana pihak kerajaan memegang kawalan 60% ke atasnya semua harta kumpulan Maybank.

Baru-baru ini Maybank mengumumkan hasratnya membeli saham Bank Internasional Indonesia (BII) yang dimiliki oleh Temasik Holding’s (sebuah syarikat yang mempunyai hubungan erat dengan kerajaan Singapura) dengan jumlah RM8.6 bilion yang merupakan 4.6 kali lebih daripada nilai bukunya.

Salah satu sebab cadangan Maybank membeli saham BII yang dimiliki oleh Temasek Holdings adalah untuk Maybank mula bertapak di bidangan kewangan di Indonesia.

Kerajaan atau Bank Negara khususnya mesti berfikir masak-masak mengenai perkara-perkara yang berhubung kait dengan pembelian ini iaitu:

1. Maybank bercadang membeli saham pada harga tinggi, 4.6 kali melebihi nilai buku;

2. Pembelian ini akan menguntungkan Temasek Holdings, sebuah syarikat berhubung erat dengan kerajaan Singapura (dan Singapura baru-baru ini diberi hakmilik Pulau Batu Puteh oleh Mahkamah Keadilan Antarabangsa di Hague, Belanda);

3. Temasek Holdings akan meraih keuntungan modal sebanyak RM2.6 billion

4. Urusniaga akan menguntungkan sebuah syarikat penasihat dengan berjuta-juta ringgit.

Oleh itu, persoalan minggu ini adalah:

Patutkah Bank Negara melarang Maybank daripada meneruskan cadangan pembelian saham BII yang dimiliki oleh Temasik Holding’s pada kadar 4.6 kali melebihi nilai buku supaya kepentingan pemilik saham kecil, rakyat dan negara dapat dipertahankan?

– 翻译员:cc liew, Wee Choo Keong 致于万二分谢意

阿強每週一問 #11

马来亚银行是马来西亚国内最大的银行,它同时也是一家政府相关公司,政府拥有这家金融集团接近60%的股权。

最近马来亚银行宣布以比账面价值高出4.6倍的价格,收购淡马锡集团(Temasek Holdings)(一家新加坡政府相关公司)于印尼国际银行(Bank Internasional Indonesia,BII)的股权,交易总值是86亿令吉。

马来亚银行对淡马锡集团在印尼国际银行股票的收购行动所做的其中一项解释是让马来亚银行能够在印尼金融领域立足。

政府或尤其是国家银行必须对这项富争议性的收购行动做出深刻的衡量。在这项收购行动中,他们:
1.马来亚银行以超过账面价值4.6倍的价格付出佣金;

2.这宗交易的利益方是淡马锡集团,一家新加坡政府相关公司。(而新加坡最近在海牙国际法庭成功获得白礁岛的主权);

3.淡马锡集团将会获得26亿令吉的资本增益(capital gain);

4.这宗交易将惠及顾问公司,并令这家公司赚取几百万令吉的顾问费。

这个星期的问题是:

是否国家银行应该停止马来亚银行以比账面价值高出4.6倍的价格,收购淡马锡集团于印尼国际银行的股权,以便小股东、人民和国家的利益受到保护呢?

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21 thoughts on “Your MP’s Question of the Week #11

  1. Anonymous

    yes yes yes…stop this stoopid proposal.I just bought some shares hoping to put my money in a high dividend yield blue chip and they come up with this.I rather they just take the money and pay out dividends.Please-lah, put your money into lucrative markets. Indonesian banking sector is absolutely notorious with cheating, scandals and come on rupiah assets? The country is having protests about the oil prices and you want to go there?Public Bank has gone into Hong Kong. I know Maybank has gone into Singapore but given its very Malay centric orientation, Indonesia seems better than HK? Remember last year the show Maybank put up for wanting law firms to have bumi partners.Come to think of it, I am a bloody idiot investing into Maybank. I should bugger off at the first opportunity. I am going off to bang my head at the wall now.RegardsLee Wee Tak

    Reply
  2. Anonymous

    Why are we selling and buying many things to and from Singapore government company, Temasek Holdings? WHY? Why? A few years ago 10% of Telekom/TM shares to Temasek Holdings. That was the time when Dato Wahid was the CEO of TM. Now he is the CEO of Maybank what a coincidence. Last year Pantai Hospital was sold to Parkway, a Singapore company. Later, the Sleepy Head government discovered that FOMEMA was part of Pantai Holding and to leave FOMEMA, controlling foreign workers agency, under the hand of Singapore company was a threat to national security. So we bought and paid a premium of about RM700 – RM800 million.Now Maybank is fighting to buy Bank Internasional Indonesia from Temasek at 4.6 times its book value. What a big joke? There are too many Singapore operatives in this country. Did I hear about 4th floor of certain building?? Come on! Surely Bank Negara is not asleep! Bank Negara should immediately stop this transaction. I have had enough of Singapore!! Thinking of Pulau Batu Puteh is enough to make me angry.

    Reply
  3. Anonymous

    It seems that Malaysia is beholden to Singapore in every sense of the word.It seems to me that we are prepared to kow tow to Singapore all the ways.We should sell the son-in-law to Singapore and that will do the country good. We all must stop this transaction otherwise Singaporean will laugh at us that we are just stupid!

    Reply
  4. Anonymous

    why government like to “niaga rugi”?we have to suspect who is the middle man and inspect how much he/she gain. dun make it like taiwan money diplomacy.

    Reply
  5. temenggong

    Khazanah should divest off its holdings in Maybank and all other companies. Govt should not get into business. Let private investors make that decision as to whether to acquire an Indonesian bank or not.Will Bank Negara bailout Maybank if later the Indonesian bank fails?

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  6. Anonymous

    why, why why all the Singapore bashing? Malaysia feels angry towards Singapore for historical reasons. People of JB is pissed off as the Singaporeans push up the cost of living and take away a chunk of our petrol subsidy.Beyond that, many many Malaysians work there, earned money to afford better living and many even decided to stay on and become PRs or citizens. Phua Chua Kang is one of the favourite characters, Jack Neo’s movies are selling well & football buffs like me catch “Football Focus”, “Football Forecast” and sometimes “Football Crazy” broadcasted from Singapore.Look accross the causeway and you will see a clean, safe country where people there enjoy a much higher standard of living with great healthcare. These are the standards that we should strive for the and the wise Perak MB took a bus load down to “lawatan untuk belajar”, unlike BN style, “lawatan sambil belajar”. Notice the difference?We want Singaporeans to spend money in Malaysia yet we fear being “colonised” if they invest in Iskandar. Hello, BP, Western Digital, Samsung, Panasonic,Seagate, Shell, Exxon Mobil, Kuwait Finance House etc are investing here. Rafidah is famed for bringing in investments so why no screaming of Ibu Pertiwi being colonised by the English, the yanks, Hai Nippon, zee Germans, Koreans, Arabs and mamaks who monopolised the teh tarik and roti canai.Yeah, yeah we call out for globalisation, K-economy, citizens of the world, meritcracy, blah blah blah and yet get over phobia by Singapore, a tiny little red dot.It is to serve as a rallying call to certain politcal interest that we made Singapore an imaginary arch enemy. Singapore has ceased to take Malaysia as arch rivals since we booted them out of the Malaysia Cup and Pesta Bola Merdeka. Hong Kong and Taiwan are looking at Singapore as their chief competitor in economic sense.Malaysians, grow wiser. Try to make money from Singapore and raise our own standard of living.If necessary, let them come in and invest in Iskandar. Singapore’s success would attract other investors.And let Jamie Yeo & Phua Chu Kang come and promote Iskandar!RegardsLee Wee Tak

    Reply
  7. Anonymous

    By the way, my point is, don’t blame Singapore. Who is the wise guy who wanted to throw our money away? It ain’t no SingaporeanRegardsLee Wee Tak

    Reply
  8. Moo..

    Maybank please wake????Do you think that the KiasuLand will sell some thing cheaply and if they think it is of great potential???

    Reply
  9. Poh Soon

    Hi all, In my opinion, Maybank had done well in last few year. Seriously speaking, the world is getting small in a sense and I do think that Maybank do need to have a present in oversea market if it were to compete with other banks. Thus, unless there are some obvious problem which cause HSBC and the other bank to back out, it won’t be reasonable to ask Maybank to give the reason on why they back out from the bid. Maybank won’t know right? As for the issue of 4.5 book value, first of all, probably we need to look at whether this is the norm that happen when license are limited and the purchase look promising. For me, i don’t know though. As of what i know, Temasek was force to either release BII or merge it with another bank that Temasek / GIC own. The decision then is to sell off BII. So, if the purchase do make business sense and there aren’t kickback or such involved, i don’t think that we should become to sentimental to related it with the Hague’s verdict on Petra Branca. Do remember that the Petra Branca issue was agreed to be heard by ICJ by both country. We should be gentleman enough to acknowledge the verdict of ICJ and not mix it with other issue. If the losing of the case is due to our incompetency in presence the fact and argument, then we should reflect on ourself. Thus, i would suggest that Maybank to be transparent in answer the query and at the same time, oppossition MP should not too sentimental and related the purchase with the Petra Branca issue. Singapore should not become the scapegoat of our own incompetency. Thanks.Regards,Poh Soon

    Reply
  10. Poh Soon

    I do a quick check on some of the bank purchase deal.1. UOB purchased 10% of Vietnam’s The Southern Commercial Joint Stock Bank (“Southern Bank”) on 2007 with a purchase price of S$46 million. The NAV of the bank then was S$158 million. 10% of S$158 million is S$15.8 million, thus the S$44 million paid was 2.91x time of the NAV. (Is NAV equivalent of book value? Seriously speaking, i don’t know.)2. DBS deal to purchase Hong Kong’s Dao Heng bank in year 2001 from Guogo group. Total asset & liabilities of Dao Heng Bank back then was HK$ 141.0 billion and 129 billion respectively. The share price of it was transacted at HSI for HK$37.6 per share right before the DBS offer announcement. The offer price is HK$60.14 per share. DBS offer HK$41.92 billion to buy Dao Heng Bank. Anybody who know account can advise on how many time the book value for the aboved mentioned purchase?

    Reply
  11. Poh Soon

    It seems that BII bank’s share was transacted at 290 rupiah at stock exchange on Nov 2007.The following are the report from Herald Tribune regarding the Maybank’s offer for BII(http://www.iht.com/articles/2008/03/26/business/maybank.php)Maybank in $2.7 billion bid to buy BII of IndonesiaThe largest Malaysian lender, Malayan Banking, is set to buy a controlling stake in Bank Internasional Indonesia for $1.5 billion, gaining a foothold in the biggest Southeast Asian economy.Maybank, which is buying the 56 percent stake in one of the biggest lenders in Indonesia from the government-run investor Temasek in Singapore and Kookmin Bank of South Korea, said Wednesday that it would also offer about $1.2 billion for the remaining 44 percent of BII.That would value the bank at $2.7 billion, 23 percent above its market value Tuesday.Global banks are converging on Indonesia to take advantage of strong growth and higher earnings potential for its financial sector.Maybank, criticized by analysts for moving too slowly outside its home market, said the acquisition would help it reach Indonesia’s relatively untapped and fast-growing banking market”I’m very surprised to see the price tag at about 4.6 times 2007 price-to-book value, even for a controlling stake,” said Joshua Tanja, a UBS analyst in Jakarta.”I never realized someone was really that eager to buy into the Indonesian banks,” he added. “It’s good news for the rest of the sector and certainly a very good benchmark for other potential strategic sales in the midsize banks space.”Maybank agreed to buy the 42 percent stake in BII from Temasek for 10.4 trillion rupiah, or $1.13 billion. It said it would acquire almost 14 percent from Kookmin for 3.5 trillion rupiah.However, it was unclear if Kookmin would agree to sell its stake, given that it was a contender to buy the bank.We have yet to receive any notification on the issue,” a Kookmin figure close to the deal told Reuters. “We’re not in the stage to decide our stance. There are several options but we haven’t made a decision.”Maybank will pay 510 Indonesian rupiah per BII share. The shares hit a peak of 480 rupiah, their highest in more than seven years, and traded 12.1 percent higher by Wednesday afternoon. The stock has risen more than 60 percent so far this year.Maybank shares were suspended from trading Wednesday.”This acquisition enables Maybank to leapfrog into the Indonesian banking market with a significant, well-established presence and attractive platform for further growth,” Maybank’s acting chief executive, Aminuddin Mohamad Desa, said. “We are excited as the Indonesian banking sector remains underpenetrated with excellent long-term potential.”Ismael Pili, a Macquarie bank analyst, estimates the loan-to-GDP ratio in Indonesia is 21 percent, compared with 76 percent for Thailand and 79 percent for South Korea, providing huge potential for further loan growth.Maybank said it expected to complete the acquisition within six months of securing approvals from shareholders and the Indonesian central bank, after which it would make the tender offer for the remaining shares in BII, the bank said.The stake of about 56 percent in BII is held by Sorak Financial, in which Temasek subsidiary Fullerton Financial Holdings has a 75 percent stake, with Kookmin Bank holding the rest, the statement added.The Temasek-led consortium originally bought a 51 percent stake in BII in 2003 for $232 million, or 82 rupiah per share, which implied a fivefold gain from the sale.”We believe that the acquisition price is expensive when compared to regional and domestic banking sectors,” Deutsche Bank wrote in a note.The deal would price BII at about 4.6 times book value, above Maybank’s 2.3, and expensive even when compared with Chinese banks that trade at between 3.3 and 5.4 book value, according to Reuters data.Temasek, which also owns a controlling stake in Bank Danamon in Indonesia, is selling its stake to comply with a central bank rule that bars foreign investors from owning more than one bank in Indonesia.BII operates in all major banking segments in Indonesia, with a network of more than 230 branches as well as Internet banking and call center operations.

    Reply
  12. Poh Soon

    The following are another related report (http://biz.thestar.com.my/news/story.asp?file=/2008/3/27/business/20080327132706&sec=business)Fitch: BII acquisition beneficial over longer term for MaybankKUALA LUMPUR: Malayan Banking Bhd’s proposed acquisition of PT Bank Internasional Indonesia (BII, ‘BB’/Stable) for about 24.9 trillion rupiah or RM8.6bil would be beneficial in the longer term, Fitch Ratings said.Fitch Ratings said on Thursday it had placed Maybank’s long-term foreign currency and local currency issuer default ratings (IDRs) of ‘A-‘ (A minus) on rating watch evolving (RWE).“Although the financial impact of this transaction is slightly negative in the near term, the agency believes that BII will bring diversification benefits to Maybank over the longer term, and help its transformation into a regional bank in future, as has been its stated intention for some time,” it added.Maybank’s had on Wednesday announced its acquisition of a controlling interest in BII. The acquisition would be done through a share sale agreement with Temasek Holdings’s unit Fullerton Financial Holdings and Kookmin Bank, where Maybank will acquire the entire 100% interest in Sorak Financial Holdings Pte Ltd.Sorak owns 55.7% of BII. Maybank will be obliged to make a tender offer to the minority shareholders for the remaining 44.3% stake in BII. The total purchase consideration, including the tender offer, could amount to about 24.9 trillion rupiah or RM8.6bil. Although detailed funding plans are not yet clear, Maybank has indicated that a part of this transaction would be funded through internally generated funds and/or borrowings. “Based on the estimated price to net book value of 4.7 times, the impact of goodwill arising from the acquisition is expected to be substantial on Maybank’s capital position and could potentially reduce Tier 1 and Total capital adequacy ratio (CARs) of Maybank (on a consolidated basis) by about 400 basis points,” Fitch said. Maybank’s Tier 1 and Total CARs were 9.2% and 13.3%, respectively, at end-December 2007. Given the substantial goodwill, the RWE reflected Fitch’s expectation that Maybank is likely to look into raising fresh capital (including hybrid securities) to bolster its CAR levels post-acquisition to support its organic growth in its domestic and regional operations. The rating agency also said the ratings would be closely monitored pending further developments on this front. Fitch said it would resolve the RWE after a detailed review of Maybank and in particular look at its capital restoration plans, as the bank’s capitalisation would be slightly affected as a result of this acquisition. BII is the sixth-largest bank in Indonesia by assets, and has a strong retail banking orientation, with consumer/SMEs accounting for about 75% of total loan book. Established in 1960, Maybank is Malaysia’s largest domestic bank, accounting for 22% of system assets. Government controlled entities and funds own close to 60% of the banking group.

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  13. Anonymous

    Poh Soon,You did a hell lot of research and that’s great.Is NAV equivalent of book value? – NAV, net asset value could well mean recorded assets less recorded liabilities so it could mean book value.However, in banks, there are a lot of off balance sheet item like contingent liabilities. For example, their service include giving performance bonds to contractors. If the contractors default in their contractual obligations, the bank would have a liability to the principal of the said contractor.It is not clear whether the NAV mentioned included such contingent liabilitiesRegardsLee Wee Tak

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  14. Anonymous

    1. UOB purchased 10% of Vietnam’s The Southern Commercial Joint Stock Bank (“Southern Bank”) on 2007 w….. thus the S$44 million paid was 2.91x time of the NAV. – yep correct 2.91 times2. …Total asset & liabilities of Dao Heng Bank back then was HK$ 141.0 billion and 129 billion respectively. – i.e. net asset is 12 billion….. DBS offer HK$41.92 billion to buy Dao Heng Bank.so purchase was at 3.49 timesAnother thing, which market is more profitable (read cusotmers’ earning & wealth level), vibrant, less political risk and mature when you compare HK and Indonesia?So why is Maybank paying 5 times above book value? The book value is open to question and if HSBC pulls out after a due diligence, it could mean a lot of liabilities are not included in the book value & we might end up paying 7 times orwhateverRegardsLee Wee Tak

    Reply
  15. Anonymous

    Stop the sales, which is not benfiting rakyat. Rakyat have to pay the ATM charges if they use more than 4 time a month.

    Reply
  16. mohamad

    why should we give so much cash to Temasek/Singapore an yet we still struggle to be a banking champion in this region? If it just cost too much and takes way to much time to build back the market cap for maybank, i guess its wiser to just scrap the idea of taking over.

    Reply
  17. Me... Only Better

    Save KL coalition gains momentumBy PEARL LEEDESPITE being only a week old, the newly formed Coalition to Save Kuala Lumpur (CSKL) movement has received positive support from KL folk.Speaking to Malay Mail, its secretary S. Thevi said the response from the public for the past one week had been overwhelming.“We’ve been getting many e-mails and calls from the public asking for more information on CSKL and what they can do to help.”“People have also said that they want to join the coalition. This is a positive sign for us.”She said that although membership of CSKL is mainly targeted at residents’associations, their doors were open to individuals who wished to join them.“We also welcome experts in their own fields who wish to share their views with us regarding the draft plan.“Another meeting among members of CSKL would be held on Wednesday and wewould meet to think of a feasible way to move forward with our plan.”Sixteen residents’ associations met last Monday to form CSKL which is aimed at ‘knocking out’ what they term as a fatally flawed DraftKuala Lumpur City Plan 2020.They claimed that the draft plan is in violation of the National Physical Plan (NPP).Headed by Tan Sri Abdul Aziz Abdul Rahman, who is the president of the Bukit Damansara residents’ association, the coalition aims to attack the draft plan at both macro and micro levels.The macro attack would involve declaring the draft plan void as it contravenes the guidelines of the NPP, while the micro objectionswould be directed at specific areas in the draft plan which would affect the livelihoods of the residents.

    Reply
  18. Anonymous

    apakah kerajaan ingin mengulanggi kesilapan yang sama ketika membeli lotus dahulu, apakah mereka tak nampak apa yang terjadi kepada proton sekarang dan bagaimana dengan pembeliaan agusta. atau ada kepentinggan seseorang dalam transaksi itu. saya tidak merasa menyesal kerana menggundi parti rakyat, sebab sekarang nampak macam mana orangnya parti pemerintah, dulu saya selalu diwarwarkan kalau dap memerintah akan jadi huru-hara, tapi apa yang saya lihat umno yang lebih huru-hara, kalau ini terus berlaku tak mustahil parti rakyat memerintah pada pr 13.anak jati gombak

    Reply
  19. Anonymous

    in malaysia, paying anything more than 2.5 times is deemed too rich. remember the CIMB-SBB deal. on what basis, is Maybank paying 4.6 times book value? Whats the P/E assets quality?Would you mind telling us who is the consultant and what is his fee?Just too many questions and dont blame us if we are suspicious of the deal if the answers are not forthcoming.

    Reply
  20. Wee Choo Keong

    Poh Soon, me …only better and othersYou all are great people especially Poh Soon, who has down so much research into this subject. Poh Soon and others I am extremely grateful to you all. I am saving all your comments for Parliamentary debates on Bank Negara or Ministry of Finance or other related matters on banking.Thank you so much for keeping me informed as MP. Without your helps I am certain that I will not be able to perform well.Thank you folks – you are great people.

    Reply

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