Published September 4, 2008

Maybank aborts Panin buy

Indonesia's Ministry of Finance blocks deal, saying it doesn't meet foreign investment rules

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(KUALA LUMPUR) Malaysia's largest lender, Maybank, has dropped a plan to buy a controlling stake in an Indonesian insurer after protracted negotiations.

'Maybank would like to inform that due to unavoidable circumstances not within its control, both Maybank and Panin are unable to proceed further in formalising the proposed joint venture partnership,' Maybank said in a statement yesterday.

Maybank had been in discussions with Panin on the acquisition of a 60 per cent stake in its Indonesian insurance arm, PT Anugrah Life Insurance. But Indonesia's Ministry of Finance blocked the transaction in November, saying that it did not meet the country's foreign investment rules.

The Indonesian regulations require a foreign holding company to maintain a majority of its portfolio in insurance business should it wish to become a shareholder of a local insurance company.

In a bid to meet the requirement, Maybank announced in April that its Malaysian insurance arm, Mayban Fortis Holdings, would take the lead in the deal, spurring hopes that a tie-up might result.

The latest development marks the second failed attempt by Maybank to gain a foothold in the most populated Islamic country in South-east Asia due to regulatory issues.

Last month, Bank Negara Malaysia, the central bank, scuppered a Maybank proposal to buy a controlling stake in Bank Internasional Indonesia. It was concerned that new Indonesian takeover rules could lead to material losses. - Reuters