By Yantoultra Ngui
SINGAPORE (Reuters) – Singapore’s largest lender DBS Group Holdings Ltd (OTC:) is exploring increasing into Malaysia with potential acquisitions of stakes in banks in its Southeast Asian neighbour, together with in one in every of Malaysia’s smallest banks by property, two sources mentioned.
DBS is exploring a purchase order of Singapore state investor Temasek’s 29.1% stake in Alliance Financial institution Malaysia Bhd, mentioned the 2 sources with information of the matter, a slice presently valued at about $460 million.
Temasek is largest shareholder in DBS with a 28.9% stake, based on LSEG information.
Different choices for increasing into Malaysia embody shopping for Kuwait Finance Home’s Malaysian retail banking property, price greater than $500 million and which have been put up on the market, one of many sources mentioned.
Deliberations are in very early levels, nonetheless, the sources mentioned, and any formal negotiations for an acquisition of a stake in a Malaysian financial institution would wish approval from the Malaysian central financial institution, or Financial institution Negara Malaysia.
The 2 sources declined to be named as talks on the potential acquisitions have been confidential.
“We don’t touch upon market rumours and hypothesis,” mentioned a spokesperson for DBS, Southeast Asia’s largest lender by property. Temasek declined to remark.
Alliance Financial institution, the second smallest listed financial institution in Malaysia by complete property, and Financial institution Negara Malaysia didn’t reply to requests for remark after enterprise hours on Friday.
Kuwait Finance Home mentioned the method for promoting its retail banking portfolio in Malaysia was in preliminary levels, and that it was not in a position to share further data.
DBS is the one Singaporean financial institution with no retail banking presence in Malaysia. Native rivals Oversea-Chinese language Banking Company and United Abroad Financial institution (OTC:) each have retail banking operations in Malaysia.
DBS’ plan to foray into Malaysia comes amid enhancing financial prospects for the Southeast Asian nation, with new infrastructure initiatives and investments anticipated to end in a surge in credit score progress.
Within the second quarter, Malaysia’s financial system expanded by an annual 5.9%, its quickest in 18 months, on greater family spending, exports and funding. Its financial unit, the ringgit, is Southeast Asia’s best-performing foreign money this yr.
‘BOLT-ON ACQUISITIONS’
DBS emerged as a regional banking powerhouse below outgoing Chief Govt Piyush Gupta’s 15-year tenure, bolstered by acquisitions that established vital presences in markets together with China, India, Indonesia and Taiwan.
DBS accomplished the acquisition of Citigroup (NYSE:)’s client banking enterprise in Taiwan in August final yr. In July, Gupta mentioned DBS was in search of bolt-on acquisitions that will assist additional strategic enlargement within the area.
Tan Su Shan, who heads up DBS’ institutional banking group and is deputy CEO, will take over from Gupta in March subsequent yr, making her the primary girl to guide the financial institution. On Thursday, DBS posted its highest ever quarterly internet revenue for July-September on document price earnings.
DBS final tried to purchase Temasek’s stake in Alliance Financial institution in 2012. These plans didn’t undergo due to regulatory hurdles, based on sources on the time.
The present Malaysian authorities below Prime Minister Anwar Ibrahim has been extra forthcoming and open to concepts and investments with an purpose to spice up financial progress, mentioned the sources with information of DBS’ plan for Malaysia.