Bank Negara asks Maybank to renegotiate BII deal

Source TheStar

KUALA LUMPUR: Bank Negara has asked Malayan Banking Bhd (Maybank) to renegotiate on the purchase price for PT Bank Internastional Indonesia TBK (BII).

Maybank said early Friday the central bank made the request to ensure the deal would not result in substantial impairment under the international financial reporting standards that would impact the fundamental financial soundness of Maybank.

“Maybank to obtain an extension to the Sept 26 deadline, being the last date to fulfill the conditions precedent as stipulated in the share sale agreement dated March 26, 2008,” it said.

These were the two conditions set by the central bank in its letter on Thursday following its earlier approval for the purchase of BII.

Maybank said the central bank informed that the current financial turmoil in the global financial market and its impact on the regional financial markets “have necessitated Bank Negara to reassess the proposal”.

“These developments have had an adverse impact on the initial assumptions underlying the post acquisition financial projections on Maybank which formed the basis on which the approval was given by Bank Negara,” it said.

Maybank said despite the flexibility granted by Bapepam on the 20% sell-down requirement, it was still concerned over the “increasingly higher risk premium in financial markets and the excessively higher cost of capital globally, including in Malaysia and Indonesia, will still result in substantial impairment of Maybank’s investment in BII”.

It said Bank Negara was concerned about the impact which would affect Maybank’s financial soundness and overall stability of the Malaysian financial system.

Maybank said it would now engage with Fullerton Financial Holdings Pte. Ltd. and Kookmin Bank on this latest decision from Bank Negara.