A Particle of Boredom

If you ask me, the Maybank Board of Director should not only resign from the post but to pay every single cent of the losses inccured in bidding to take over the PT Bank Internasional Indonesia Tbk (BII). Can you imagine  to make investment in foreign country and its involved a billion of money but WITHOUT Real Risk Assessment… That will be a  REAL RISK if the Member of the Board still there in Maybank.

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KUALA LUMPUR: Malayan Banking Bhd’s (Maybank) board of directors should take responsibility for the potential loss from its Indonesian bank acquisition folly, as no real risk assessment was done prior to the purchase, said Minority Shareholders Watchdog Group (MSWG) chief executive Abdul Wahab Jaafar Sidek.

He said the potential loss of RM480 million arising from the purchase decision would represent a loss for shareholders.

Speaking after the launch of MSWG’s Shareholdings Analysis Report for 1997-2006 and Dividend Survey for 2007 here yesterday, Wahab said the watchdog was still very much against the purchase of PT Bank Internasional Indonesia Tbk (BII), and even more so now in view of the fragile market condition in Indonesia.

“The board and those responsible for the preparation of the terms of the agreement should resign if the final outcome proved to be detrimental to its shareholders.

“This is a desperate attempt by the bank to play catch up in terms of overseas expansion, and it was done without proper due diligence. The potential loss if the deal does go through could be up to RM2.5 billion. The central bank cannot be blamed as ultimately, the decision to go ahead with the acquisition came from the board,” he said.

Wahab also questioned the bank’s wisdom in purchasing the stake from foreign investors just to gain entry into the Indonesian market. “Why buy at the current market conditions when foreign investors were so eager to sell. Such a hasty move should be avoided and a proper timing for any acquisition is important to ensure shareholders’ interests are protected, ” said Wahab.

Maybank announced in March it proposed to acquire Sorak Holdings Ltd, which had a 55.7% stake in BII from Singapore’s Fullerton Financial Holdings Pte Ltd and Kookmin Bank of Korea for RM4.8 billion cash. The acquisition was valued at 4.6 times price-to-book.

Maybank would then make an offer to buy the remaining 44.3% stake in BII, which would cost the group another RM4 billion, after obtaining approval from Indonesia’s central bank in June. The BII takeover would have made Maybank the largest foreign financial services company in Indonesia.

Analysts had said Maybank’s offer of RM8.8 billion was about 20% above BII’s market price. The book value of 4.6 times was also double the average valuation of Indonesia’s publicly-traded banks.

Source : The Edge Daily