Jakarta rejects Maybank's appeal

INDONESIA'S capital markets regulator has refused to relax rules for Malayan Banking Bhd, putting its RM8.8 billion deal to buy PT Bank Internasional Indonesia (BII) closer to collapse while a RM480 million deposit risks being forfeited.Maybank wanted an extension of time for it to cut down its stake in BII to 20 per cent from the stipulated two years.The timeframe came about in a new Indonesian law which was enacted on June 30 this year, months after the deal to buy BII was signed.Malaysia's Bank Negara had revoked its approval on the deal, saying two years is too short a time and Maybank faces risks of material losses should it be made to dispose of the shares to meet Indonesia's requirements.
Now that the Indonesian regulators have shot down Maybank's appeal, it is almost certain that the agreement to buy BII will lapse by September 26."The company respects this latest decision," said Maybank in a statement to Bursa Malaysia yesterday.This also means that Maybank is at risk of losing its deposit of RM480 million to Singapore's Temasek Holdings, unless Indonesia's Capital Market and Financial Institution Supervisory Agency (Bapepam) reconsiders its decision."It will be very unlikely for them (Indonesian authorities) to change their mind, chances are very slim. Looks like there won't be write-backs on the provision they made," said Jupiter Securities head of research Pong Teng Siew when contacted.During its full year ended June 30, Maybank made a provision of RM483.3 million, mainly for a non-refundable deposit it paid to buy BII.Maybank had also asked for Bapepam to let it conduct a partial tender offer of up to 80 per cent of BII shares, as it would meet the objective of a 20 per cent public free float upon the close of tender offer. This idea was also rejected."Bapepam had... informed Maybank that it is unable to consider Maybank's request ... as this would create a negative precedent to the newly introduced regulation," Maybank said.RAM Ratings, in a statement, expects the outcome to have no immediate rating impact on the lender."The bank's AAA (stable outlook)/ P1 ratings are anchored by its strong Malaysian franchise and sound credit fundamentals," said its head of financial institution ratings Promod Dass.Meanwhile, the Minority Shareholder Watchdog Group, which has sent a set of questions to the lender for clarification, said it is satisfied with the response. However, it remains opposed to the deal.Its chief executive officer Abdul Wahab Jaafar Sidek believes part of Maybank's board should be accountable and should step down, if the lender loses its deposit.Maybank shares have taken a beating since it announced the acquisition on concerns that it is overpaying. Its shares have fallen by 12.3 per cent, from RM8.95 each to RM7.85, since the deal was announced.-www.btimes.com.my