Published September 26, 2008

Maybank gets sale extension from Indonesia

It says that it has verbal agreement with no limit to the extension

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(KUALA LUMPUR) Malayan Banking Bhd, Malaysia's biggest bank by assets, said that it received 'verbal' agreement from Indonesia's regulator to extend the timing for its sale of a 20 per cent stake in PT Bank Internasional Indonesia every year.

Indonesia has said that it would extend the deadline should Maybank stand to lose more than 10 per cent of its US$2.7 billion purchase of Bank Internasional, scheduled to close today. The rule imposed this year requires buyers of local companies to sell 20 per cent of the target to the market within two years.

'There's no limit to an extension,' Maybank chief executive officer Abdul Wahid Omar said after a meeting with shareholders in Kuala Lumpur yesterday. 'It will be done annually.'

The extension is crucial to the transaction, which earlier faced opposition from the Malaysian central bank on concern that Maybank would lose RM3.4 billion ringgit (S$1.4 billion) under the new rule. Investors are also concerned as Maybank's purchase price values the Indonesian bank at twice the value of its local peers.

Malaysia's central bank lifted its opposition after the Indonesian regulator offered the extension. Singapore investment company Temasek Holdings Pte, which is selling the Indonesian bank stake, said on Wednesday that Maybank informed it that the deal is scheduled to close on Sept 26, the deadline set when the agreement was signed six months ago.



'There have been various twists and turns to the transaction,' Mr Abdul Wahid said. 'Baring unforeseen circumstances, as per the agreement, we have until tomorrow to complete to the transaction. It's just another day, I suppose you will find out tomorrow. I don't want to say something and then have to reverse it.'

Maybank has raised six billion ringgit for the acquisition, including funds in Singapore dollars that are available for the payment today, he added.

Bank Internasional's shares rose 4.4 per cent to 470 rupiah in Jakarta yesterday, while Maybank was unchanged at RM6.90 in Kuala Lumpur. -- Bloomberg