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Wednesday May 14, 9:20 PMMalaysia govt defends Maybank's buying spreeKUALA LUMPUR, May 14 (Reuters) - Malaysia's government on Wednesday rejected opposition criticism against a flurry of acquisitions by top lender Malayan Banking Bhd , saying it was necessary to catch up with neighbouring Singapore.Second Finance Minister Nor Mohamed Yakcop told parliament that Malaysian banks must grow and develop into regional banks to better compete with their peers in the region. "This is a golden opportunity," he said. "It will bring long-term benefits." Long criticised for being too slow to expand overseas, state-controlled Maybank suddenly sprang into action in March. It bought 15 percent of Vietnam's An Binh Bank for $135 million and a week later paid $2.7 billion for a controlling stake in Bank Internasional Indonesia (BII) . This month, it bought 15 percent of Pakistan's MCB Bank for $680 million, which analysts said was a high price and that it might have to cut the proportion of profits it pays out as dividends and raise capital to restore its balance sheet. Malaysia's emboldened opposition, which recently denied the ruling coalition a two-thirds parliamentary majority, had pressed Nor Mohamed on why Maybank was overpaying for the stake in BII and for investing in what it deemed as politically risky Pakistan. Many opposition lawmakers were unmoved by Nor Mohamed's lengthy reply, prompting the minister to direct Maybank to hold a special briefing for the MPs. Nor Mohamed said Maybank had the funds and the capacity to support its overseas investments. "This is in line with the government's long-term plan to strengthen the country's financial sector and turn it into a regional financial hub especially in Islamic finance," he said. "We need to compete with Singapore to develop regional banks." The Government of Singapore Investment Corp (GIC) recently said it might invest in more banks in Europe and the United States if it gets the chance, adding to its stakes in beleaguered bank UBS and Citigroup. GIC, one of the world's largest sovereign funds, invested about $11 billion in UBS and Citigroup after they wrote off billions of dollars in the wake of the credit crisis in the United States, while sister fund, Temasek Holdings [TEM.UL], injected $5 billion into Merrill Lynch . The two Singapore funds have since seen the value of their investments shrink, with UBS shares falling about 35 percent since GIC first announced its plan to pump funds into the Swiss bank. (Editing by Ramthan Hussain) |
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