CIMB to free RM3.6b in capital from building sale

CIMB Bank Bhd expects RM3.6 billion of capital release from the sale and lease back of Menara Bumiputra Commerce at Jalan Raja Laut, in Kuala Lumpur, due to be completed early 2008.Bumiputra-Commerce Holdings Bhd (BCHB) is selling the prime property to Pelaburan Hartanah Bumiputra Bhd for RM460 million which CIMB Bank will lease back for 10 years with an option for five plus five years.“Modern banks should not do other things but banking. We should rent our buildings. Other people are good at owning buildings and we rent from them,” said CIMB group chief executive officer Datuk Nazir Razak.The RM3.6 billion will be ploughed into the group’s business, he said, pointing out that the same structure was deployed for Bangunan CIMB, its new headquarters.He said under the sale and lease programme for Menara Bumiputra Commerce, the banking group’s cost saving based on the group’s entire consolidation, mainly in terms of rental, will amount to RM7.5 million a year.“At the moment we are in 25 buildings, and we will streamline our operations into two or three buildings and this will result in some cost savings for us,” he explained.There could be another such exercise as the group still owns several bank branches as well as a building at Jalan Tun Perak, describing it as part and parcel of its capital management exercise.