Maybank Briefing

May 28, 2008

Today (27 May 2008) at 12:30 pm, Maybank’s CEO, Datuk Wahid and two other high ranking officers of the bank, came to Parliament to brief MPs on Maybank’s proposed acquisition of Temasek Holdings’ (a company owned by the Singapore government) shares in Bank Internasional Indonesia (BII) for the total price of RM8.6 billion (i.e. 4.6 times the book value of the shares.)

On 20 May 2008, I asked the Minister of Finance about this Maybank’s proposed purchase of BII shares and part of the Minister’s answer was:

Sungguh pun terdapat saingan yang begitu hebat dari bank negara-negara maju seperti HSBC, Bank of China dan South Korea Kookmin Bank, Maybank telah Berjaya membeli BII.”

Note:
Please see Parliamentary Question & Answer for full details.

The above answer of Minister of Finance was most misleading as it gave the impression that all the banks mentioned were fighting tooth and nail for the purcahse and Maybank won the bid.

Datuk Wahid also told us that Maybank appointed a consultant in Indonesia to advise them on the purchase. The consultant gave Maybank a range on the price of the shares. Datuk Wahid admitted that Maybank’s offer to Temasek was on the high side of the range given.

I also asked Datuk Wahid whether it was a coincidence that when he was the CEO of TM (Telekom), TM sold 10% of its shares to Temasek Holdings and now when he is the CEO of Maybank, Maybank is buying BII shares from Temasek Holdings. Of course, Datuk Wahid did not reply to this point.

When I questioned Datuk Wahid this morning about the bidding, his answer was:

“During the initial stage of the bidding, all the above mentioned banks took part and thereafter some withdrew and the remaining bidders were HSBC, Bank of China and Maybank. Finally, HSBC also withdrew, leaving Bank of China and Maybank to fight and the bid by Bank of China was 505 Rupiah per share and Maybank’s bid was 510 Rupiah.”

Gombak MP, YB Azmin Ali also questioned on the rationale of the purchase. Parit Salak MP (BN) was questioning whether ECM Libra was involved in the transaction. MP for Pasir Mas, YB Ibrahim Ali, was also questioning whether ECM Libra was involved in the transaction and that whether there was any payment of commission.

You will observe that the Minister of Finance’s reply and Datuk Wahid’s reply were totally different from one another. I do not know who is telling the truth on the bidding exercise.

I am not convinced that the purchase was in the best interest of Maybank. I hope that Bank Negara will not allow Maybank to purchase BII shares from Temasek Holdings.

Incidentally, MP for Rembau, Tuan Khairy Jamaluddin only came for the meeting after it has begun and he was not noticed.

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During the Answering Session by Minister of Transport …

MINISTER OF TRANSPORT HAS CONFIRMED IN PARLIAMENT THAT AIRASIA OWED MALAYSIA AIRPORT HOLDING BHD (MAB) RM110 MILLION FROM 2002 UNTIL 31-03-2008 !!!

During the Minister of Transport answering before Parliament: Wee Choo Keong [Wangsa Maju] informed Parliament that on 13 May 2008 it was untrue when the Minister of Transport said this: “With regards to the debt owed by AirAsia to Malaysia Airport Holding Bhd (MAB) the amount was RM5,443,746 and it was in the process of making payment.” Wee Choo Keong further added that the Minister of Transport was also misleading this August House when he (the Minister) said that AirAsia owed MAB the sum of about RM5.4 million and it was in the process of paying.

Wee Choo Keong [Wangsa Maju] challenged the Minister of Transport and stated that AirAsia actually owed MAB more than RM80 million, Petronas for fuel RM20 million and the Government for RM35 million for the repairs of 7 aeroplanes, which MAS took over from AirAsia when AirAsia gave up Rural Air Services (RAS). What actions will the Minister of Transport take pertaining to the said debts?

The Minister of Transport replied that MP for Wangsa Maju got the figures wrong. The Minister of Transport has confirmed in Parliament this evening that from 2002 until 31 March 2008 AirAsia owed about RM110 million to MAB for all services at all airports. The Minister went further to state that AirAsia is disputing its debt of RM110 million to MAB and this matter has been sent to the Ministry of Finance to resolve.

Wangsa Maju MP also informed Parliament that low cost carriers namely Skywest and Aloha in USA have collapsed. Low cost carrier in Hong Kong has also collapsed recently and there are four low cost carriers in India which are in trouble now.

Wangsa Maju MP also informed Parliament that AirAisia also involved in fuel hedging at about US$82 per barrel. Now oil prices per barrel has gone up more than US$120.

In the light of the above, Wangsa Maju MP asked the Minister of Finance to give an undertaking that the Government will not bail out or give any more subsidy to AirAsia if it is facing financial problems. But the Minister of Transport did not provide an answer to this undertaking.

Note:

1. How could MAB allow AirAsia to chalk up to RM110 million debt for MAB services from 2002 to 31 March 2008?

2. Since this is a private debt of RM110 million owed by AirAsia to MAB, why must this debt be referred to the Ministry of Finance?

– – – – – – o O o – – – – – –

Soalan No. 30: (PR-1211-L12173)

Tuan Wee Choo Keong [ Wangsa Maju ] minta MENTERI KEWANGAN menyatakan alasan mengapakah Bank Negara membenarkan Maybank untuk membeli “controlling stake” di Bank Internasional Indonesia pada kadar 4.6 kali daripada nilai buku (book values) daripada sebuah syarikat berkaitan dengan Temasek Holding dari Singapura dan apakah peraturanperaturan yang melindungi transaksi yang melibatkan GLC.

Tuan Wee Choo Keong [Wangsa Maju] to ask the Minister of Finance to state on what basis Bank Negara allowed Maybank to buy a controlling stake in Bank Internasional Indonesia at 4.6 times of its book values from a company connected to Temasek Holding of Singapore and what are the rules covering such transaction involving GLC.

Jawapan:

Tuan Yang DiPertua,

Untuk makluman Ahli Yang Berhormat, Bank Negara Malaysia (BNM) tidak terlibat dalam proses penentuan harga pembelian ekuiti institusi-institusi keangan. BNM hanya membuat penilaian sama ada insittusi kewangan tempatan tersebut mempunyai dana modal dan kapstio bagi membuat pembelian tersebut serta impak pembelian terhadap kedudukan kewangan institusi kewangan tersebut. Secara umumnya, harga pembelian ekuiti oleh insitusi kewangan bergantung kepada beberapa factor seperti berikut:

i. nilai francais yang ditentukan oleh factor-faktor seperti pelangan, raqngkaian cawangan dan kepakaran kakitangan bank tersebut;

ii. kekuatan bank berdasarkan saiz dan keuntungan bank;

iii. jumlah ekuiti yang dibeli di mana jumlah ekuiti yang lebih besar mungkin akan memerlukan premium yang lebih tinggi, terutamanya bagi ekuiti yang memberi kawalan; dan

iv. tahap persaqingan daripada pembida yang lain.

Sehubungan dengan itu, dalam transaksi antara Maybank dan Bank Internasional Indonesia (BII), BNM tidak terlibat dalam menentukan harga pembelian ekuiti tersebut. BNM hanya menyokong rancangan pengembangkan institusi kewangan tempatan jika pembelian tersebut menghasilkan peluang baru kepada institusi terbabit dari segi aliran pendatan, pernaiagaan dan pengembangan operasi.

Untuk makluman Ahli Yang Berhormat, harga pembelian ekuiti BII ditentukan oleh Maybank berdasarkan persetujuan oleh pemengang-pemengang sahamnya yang turut mengambil kira pulangan dan risiko bagi pembelian tersebut. Sungguh pun terdapat saingan yang begitu hebat dari bank Negara-negara maju seperti Hongkong Bank, Bank of China dan South Korea Kookmin Bank, Maybank telah Berjaya membeli BII.

Maybank telah menandatangani perjanjian pada Mac 2008 untuk mengambil alih 55.7 % BII dengan kos sebanyak USD1.5 bilion (RM4.8 bilion). Maybank perlu membuat tawaran bagi baki 44.3% menjadikan keseluruhan kos pengambilalihan BII berjumlah RM8.6 bilion.

Tuan Yang DiPertua,

Walaupun hasrga pembelian ini dilihat sebagai sebuah Negara, kita harus mengalakkan Maybank mengambil satu tindakan dalam konteks jangka panjang. Pembelian ekuiti BII oleh Maybank adalah satu langkah penting ke arah menjadikan Maybank sebuah bank serantau yang terkemuka, sebuah bank yang kukuh dan berdaya saing. Selaimn memperluaskan Sidstem Perbankan Konvensional, Maybank juga berpeluang memperlukan perniagaan kewangan Islam ke Negara Indonesia memandangkan Negara tersebut mempunyai bilangan penduduk beragama Islam yang terbesar di dunia.

Kerajaan yakin bahawa pengurusan Maybank dan juga Lembaga Pengarah Maybank melakukan pembelian ini bukan saja untuk kebaikan Maybank tetapi juga untuk kebaikan Negara. Pada masa ini trend globalisasi yang pesat adalah salah satu factor penting yang kita harus hadapi. Adalah penting dalam scenario ini untuk bank-bank di Malaysia berkembang menjadi bank serantau atau regional bank. Kita perlu memandang jauh dan menandingi Negara-negara lain yang telah membangun bank serantau masing-masing. Kita juga seharusnya mengambil langkah untuk membangun bank serantau supaya dalam jangka masa panjang kita tidak ketinggalan dan dapat mencapai matlamat menjadi hab kewangan di rantau ini dan hab kewangan perbankan Islam di dunia memandangkan kita mempunyai kelebihan dlam bidang kewangan Islam.

Kerajaan menyokong langkah yang diambil oleh institusi perbankan Malaysia untuk mengukuhkan kehadiran komersial dirantau ini untuk meraih peluang yang muncul hasil daripada pertumbuhan ekonomi yang mapan di rantau ASEAN. Kerajaan akan terus menyokong bank-bank Malaysia melabur dalam bank-bank serantau dan berkeyakinan bahawa bank-bank kita mempunyai keupayaan untuk menjadi regional champion.

Note:

Below is part of Answer in paragraph 3 above.

Sungguh pun terdapat saingan yang begitu hebat dari bank Negara-negara maju seperti Hongkong Bank, Bank of China dan South Korea Kookmin Bank, Maybank telah Berjaya membeli BII.”

From my information, this was not the case. These foreign banks pulled out their bids because the price (4.6 times above book value) offered by Maybank was far too high.