Published August 26, 2008

Maybank to appeal to Bank Negara for BII deal approval

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(KUALA LUMPUR) Malayan Banking Bhd plans to ask Malaysia's central bank to reinstate approval for a US$2.7 billion takeover of PT Bank Internasional Indonesia (BII) after holding talks with the seller and Indonesian authorities.

The central bank dropped its backing for the purchase in July, arguing that a new takeover law in Indonesia might lead to losses at Maybank, as the company is known. The Kuala Lumpur-based lender, which said yesterday that it is still pursuing the deal, needs approval by Sept 26 or the agreement will lapse.

Maybank, Malaysia's largest bank, is holding talks with Singapore's Temasek Holdings Pte - which agreed to sell its stake in BII - and with the Indonesian regulator, Maybank CEO Abdul Wahid Omar said yesterday. 'We will find a way forward to mitigate and go back to the central bank and appeal to reinstate the approval,' he told reporters. 'We will fulfil all conditions and see how we can move forward. We are looking at all possible options.'

Malaysia's central bank, Bank Negara Malaysia, had no immediate comment, said a spokeswoman, who can't be named according to central bank rules.

Many analysts considered the acquisition overpriced, and Maybank stock has lost 17 per cent since the deal was announced on March 26. Investors questioned how Maybank could pay 4.7 times book value for BII - more than double the then average valuation among publicly traded Indonesian banks.



The stock fell 1.3 per cent to RM7.35 at the close yesterday.

The new Indonesian rule requires companies to sell 20 per cent of a local takeover target to the public within two years. The regulation, enacted in June, may trigger 'material losses' at Maybank from selling the stock and writing down the investment, Bank Negara said.

Indonesia's market regulator said on Aug 6 that it may ease the rule. The deadline to sell the stake might be extended, depending on market conditions, said Ahmad Fuad Rahmany, chairman of the Capital Market and Financial Institutions Supervisory Agency. -- Bloomberg