DBS’s Revised Proposal for Alliance Bank Stake Acquisition
The DBS Group Holdings, a Singapore-based bank, has made a renewed bid to acquire a share of Alliance Bank Malaysia. This comes after the initial application to acquire up to 49% stake was not approved by the Malaysian central bank, Bank Negara Malaysia. According to sources mentioned by Bloomberg, DBS has now resubmitted a revised request to acquire up to 30% stake in Alliance Bank, thereby aligning with the Malaysian regulations for foreign ownership in financial institutions.
Why the Revised Proposal?
DBS, being the largest bank in Southeast Asia in terms of total assets, initially sought for a waiver from Bank Negara Malaysia for the acquisition as the standard limit for foreign ownership in Malaysia is 30%. The revision to the initial request has reportedly increased the odds of securing approval from the central bank, according to sources who requested anonymity due to the private nature of the information.
In September, Bloomberg reported about a delay in DBS Group’s intentions to acquire a 49% stake in Alliance Bank Malaysia due to the lack of regulatory approval. If the revised proposal is approved, it would open doors for DBS to kick-off discussions with Alliance Bank’s largest shareholder, Vertical Theme. Vertical Theme is a Malaysian holding company supported by Singapore’s state investor, Temasek Holdings.
The Stakeholders Involved
Temasek Holdings, through Duxton Investment & Development, owns a 49% stake in Vertical Theme. In addition, Temasek also holds approximately 28.3% of DBS. Representatives from DBS and Vertical Theme have decided to remain silent on the development. An Alliance Bank spokesperson stated that the company was not aware of the matter, while Bank Negara Malaysia has not yet responded to requests for comment, as reported by the media outlet.
What’s at Stake for DBS?
A successful transaction would grant DBS access to the Malaysian banking sector, a market where Singaporean competitors such as Oversea-Chinese Banking and United Overseas Bank already operate. Currently, Alliance Bank has a market capitalisation of about RM7.7bn ($1.9bn).
As DBS continues to expand its footprint in Southeast Asia, this potential acquisition could be a strategic move towards increasing its market share and competitiveness in the region. However, the final decision lies with the regulatory authorities and it remains to be seen whether DBS’s revised proposal will meet with approval.
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