Malaysia currently caps foreign ownership of commercial banks at 30%, but there has recently been talk of the government relaxing the limit in some sectors, the people said. if DBS cannot get a green light to buy as much as 49% of the Malaysian lender, one of the people said. Considerations are ongoing and no final decisions have been made, the people said. Representatives for DBS and Vertical Theme’s backers declined to comment, while Alliance Bank said it had no knowledge on the matter.
Bank Negara Malaysia, the country’s central bank, said it doesn’t comment publicly on specific applications on the acquisition or disposal of interest in shares of its regulated entities as a matter of policy.
Applications concerning the shareholding of licensed banks, including those submitted by foreign entities, are assessed in accordance with the relevant provisions under the Financial Services Act 2013 and the Islamic Financial Services Act 2013, Bank Negara Malaysia said in a statement in response to queries from Bloomberg News.
A transaction for Alliance would give DBS a wider footprint in Malaysia, where Singaporean rivals Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. already have an established presence.
DBS is Southeast Asia’s largest bank by total assets. Temasek owns 49% of Vertical Theme via Duxton Investment & Development Pte, while the remainder is held by RRJ Capital founder Richard Ong, hotelier Ong Beng Seng and corporate adviser Seow Lun Hoo through Langkah Bahagia Sdn. Temasek is also DBS’s biggest shareholder with a 28.3% stake in the company.
Alliance Bank’s shares have fallen 4.8% this year, roughly in line with the performance of Kuala Lumpur’s main stock benchmark index. The Malaysian lender has a market capitalisation of about RM7.8 billion ($2.37 billion).
