Maybank Shares Up on BII News, But Worries Ahead

Shares of Malaysia's top lender, Maybank, raced higher on Wednesday after the central bank blocked its plan for a costly Indonesian purchase, but analysts said the move could hurt growth in the long run.


In the afternoon session, shares of Malayan Banking Bhd, or Maybank, were up 5.3 percent at 7.95 ringgit. The stock had opened at 7.80 ringgit.

In March, Maybank agreed to buy a 55.5 percent stake in Bank Internasional Indonesia (BII) from Singapore state investor Temasek and South Korea's Kookmin Bank for $2.7 billion.

Maybank's bid represented a 23 percent premium on BII's share at that time, considered to be the highest premium ever paid by a foreign buyer for an Indonesian bank.

The deal triggered strong criticism from Malaysian lawmakers, who said Maybank was paying too much for the stake.

Some brokers called for re-rating of Maybank shares on the news, saying the shares were relatively cheap.

"The share price rise is a knee-jerk reaction, but in the long term the central bank move is not good for Maybank, as it needs a foreign acquisition to fuel its future growth," said one dealer at a local investment bank. "It has to move abroad as the domestic market is becoming too saturated," he said.

Other analysts said the move would not bode well for the Malaysian market. "The on-off situation can also erode further the level of uncertainty in terms of the investment climate in our local bourse," investment bank Hwang-DBS said in a note.

Neighboring Singapore's state investment arm Temasek said late on Tuesday that Maybank had not provided any update on the latter's planned purchase of BII.

"We have not received any notification from Maybank. As far as we are aware, all conditions have been fulfilled for the transaction to complete on July 31," Tow Heng Tan, a director at Temasek unit Fullerton Financial Holdings, said in a statement.

Kookmin Bank on Wednesday declined to comment on the news, saying that it needed time to study the situation.

The bank was expected to book profits from the sale of BII shares, worth $378 million, in the current quarter.