Public Bank ranked as strongest bank in M’sia

Thursday, 18 October 2012 16:22 Farah Adilla

Public Bank has leapfrogged both CIMB Group Holdings Bhd and Malayan Banking Bhd to the top spot in 2012 as Malaysia’s strongest bank, according to the Asian Banker 500 2012 (AB500) report.

“This was largely due to the cost and risk management as a result of the conservative approach of the bank,” the report said.

Further, the report also said that the Asia Pacific banking sector is expected to remain resilient as economies in the region continue to expand in 2011 albeit at a slower pace than last year.

Singapore-based financial services community strategic business intelligence provider Asian Banker said the Asia-Pacific regional banks saw a significant acceleration in asset growth in 2011 while the largest 500 banks from the US and the European Union did not grow as fast.

“If the momentum holds, Asia-Pacific regional banks are likely to overtake their Western peers by 2014.

“This is primarily due to a combination of resilient economic performance of the region’s economies, increasing private wealth and growth in the number of Asian high net- worth individuals and continual retrenchment of some Western banks from Asia and growing regional expansion by Asia-based banks,” it said in a statement.

Asian Banker said key performance indicators of the banking sector in the Asia-Pacific region such as assets, loans, deposits and net profit grew over 15% last year.

“In particular, net profit growth remains staggering at 43% to US$315.9 billion (RM958.3 billion) albeit slower than 2010’s growth rate of 53%,” it said.

Asian Banker said 2011 has been a good year for banks in Malaysia, achieving weighted average asset growth of 21.7% year-on-year (YoY) which was among the top in the Asia-Pacific region.

“The growth was mainly fostered by the strong and resilient gross domestic product growth of the Malaysian economy and Islamic banking growth of 5.1% YoY and 33% YoY in 2011 respectively as Malaysian banks embark on a regional expansion strategy in an attempt to increase their regional presence and to diversify their geographical revenue sources,” it said.

Asia-Pacific regional banks have been shoring up their capital positions as implementation of the new Basel III requirements draws near, it said. “Asset-weighted average Tier 1 and total capital adequacy ratio (CAR) grew much stronger to 14% and 16.5% in 2011 from 9.1% and 12.3% in 2010 respectively.

“For this iteration, Singapore and Philippine banks rank among the highest for Tier 1 and total CAR respectively,” it said. Asian Banker said lack of sovereign debts deter Asia-Pacific regional banks’ compliance to Basel III liquidity requirements.

“Although banks are able to withstand long-term stress to their operations as reflected in their strong capital positions, short-term risks such as liquidity continue to be one of the top issues for Asia-Pacific regional banks,” it said.

AB500 research manager Doron Foo said some regional banks in countries such as Australia, Singapore and Hong Kong are still unable to satisfy Basel III liquidity requirements due to the lack of sovereign debt in their domestic countries.

http://themalaysianreserve.com/main/index.php?option=com_content&view=article&id=2338:public-bank-ranked-as-strongest-bank-in-msia&catid=36:corporate-malaysia&Itemid=120

Shopping spree sends Bursa to all-time high

Saturday October 20, 2012

Shopping spree sends Bursa to all-time high

The FBM KLCI closed at a record 1,666.35. However, the broader market was weaker in line with Asian bourses, with declining stocks on Bursa Malaysia beating advancers 409 to 294 and 338 counters unchanged.

“I think the positive run had been anticipated, backed by the fundamentals. It is still on an evolving rotation with the telecommunication, banking and consumer stocks getting a fair bit of interest,” said Inter-Pacific Securities Sdn Bhd head of research Pong Teng Siew.

He said banking stocks were relatively attractive right now as it had rather been muted recently due to the upcoming Basel III framework that would see banks needing higher capital requirement, driving up the cost of lending.

“With the overall price to earnings ratio at about 11.5 times, it (banking stocks) is attractive when compared with the telco industry which some stocks are trading at about 30 times, except for Axiata, which is still the cheapest among the telco stocks. Funds might be positioning themselves now ahead of the upcoming results season, and shifting their funds to more attractive sectors of the market,” he said.

http://biz.thestar.com.my/news/story.asp?file=/2012/10/20/business/12200821&sec=business

Asian bank threat to Basel III

11/10/2012 | Elliot Wilson

Asian banks are meeting informally, seeking to decide whether to adjust the Basel III rules

Many of Asia’s leading banks are expected to meet today in Tokyo behind closed doors to decide whether to accept – or potentially reject – controversial financial regulations set to come into effect on the first day of 2013.

The heads of several leading Asian lenders, including Nazir Razak, group chief executive at Kuala Lumpur-based CIMB Group, are set to convene today in an informal closed-door session to discuss the Basel III rules, chaired by Andrew Sheng, president of Hong Kong-based, Asia-focused consultancy, the Fung Global Institute.

Although it is an informal meeting designed to gauge opinion among Asian leaders and regional financial regulators about the new rules, all the major Asian banks will be there, Razak said. “The subject is whether to agree to form a consensus view on Basel III, and whether to draw up recommendations to present to our regulators back home. We have to decide whether to adjust Basel III rules, or just tweak them.”

Razak’s comments mark the first time a senior financial figure has expressed public disquiet over the incoming regulations, drawn up in the wake of the 2008-2009 financial crisis in an effort to create minimum standards of bank liquidity and place a cap on liquidity levels.

He said it was too early to describe the meeting as concrete evidence of a rift between emerging and developed markets, but said all of the lenders meeting today in Tokyo were “growing increasingly and collectively concerned” over the rules, adding: “It makes sense to act collectively rather than individually over this matter.”

Among the banks meeting in Tokyo on Friday are believed to be Sumitomo Mitsui and Mizuho Bank of Japan, CIMB’s Malaysia peer Maybank, KB Kookmin Bank of Korea, and Singapore-based DBS.

Today’s meeting had its roots in an informal chat that took place in Singapore on 23 September during the Formula One motor race. “Lots of bankers got together then and there and decided to do something,” Razak says. “We all agreed to take the matter further in Tokyo this week.”

News of the meeting quietly spread throughout southeast and northeast Asia. Iwan Azis, head of the Office of Regional Economic Integration at the Asian Development Bank, heard about the gossip in Jakarta, where the news gained quiet but firm approval, he says, among smaller Indonesian lenders, along with the country’s financial regulators.

“The smaller Indonesian banks for instance are not happy about [Basel III] at all,” Azis said. “You didn’t hear them complain before, but the time is fast approaching where they have to impose these rules, and they are worried. If you are a bank with a lower rating, somewhere in the ‘Bs’, you are going to have to raise your capital adequacy levels considerably.”

Even the International Monetary Fund in September warned that new regulations were skewed toward the interests of developed-world lenders. The fund noted that big banking groups would be “better able” than smaller banks to absorb the cost of regulations, driving more business in direction of market leaders.

http://www.emergingmarkets.org/Article/3101381/Financial-Markets/Asian-bank-threat-to-Basel-III.html

Banks unlikely to raise capital

Wednesday October 10, 2012


By YVONNE TAN

PETALING JAYA: Banks in Malaysia are already well-capitalised and are unlikely to engage in capital raising activities in the near term unless they are looking at significant outlay in that time frame, said banking analysts.

In the case of Malayan Banking Bhd (Maybank) which recently raised a record RM3.66bil via a private placement exercise, the bank was priming itself to expand its current business in the region, a banking analyst said.

It is understood that via a conference call with analysts yesterday, Maybank said that it was looking to strengthen its current businesses in the region, including those in Singapore and Indonesia and that it was not looking at any merger and acquisition (M&A) activity for now as previously speculated.

“We believe that most banks in Malaysia are unlikely to engage in capital raising activities in the near term given that they are well capitalised to meet the Basel III requirement, unless they foresee that they may need capital for something else.

“We do anticipate that most banks will be in capital conservation mode to preserve their capital in order to meet the capital requirement under Basel III which will kick off next year,” Alliance Research banking analyst Cheah King Yoong said.

The core equity capital ratio, which measures the amount of capital a bank has, is generally above 7% for all banks in Malaysia and this is healthy enough to meet Basel 111 requirements, according to Cheah (see table).

The new Basel III rules require banks to hold top quality capital totalling 7% of their risk-bearing assets, from the current 2%.

Of the 7%, 4.5% comprises core tier-1 capital, which is made of shares and retained earnings, and an additional 2.5% of capital conservation buffer.

In a press release on Monday, Maybank said its private placement exercise was a move to boost its equity capital ahead of the implementation of the Basel III capital framework.

The funds raised would also support its growth objectives, particularly, in relation to the rapid expansion of its business in Indonesia, Philippines and other regional markets, it said.

Apart from the continued strength of the Malaysian domestic economy, Maybank was seeing tremendous opportunities in the economic growth across the Asean region, it added.

http://biz.thestar.com.my/news/story.asp?file=/2012/10/10/business/12147961&sec=business

Maybank may be able to raise RM2.64bil via shares placement

Saturday October 6, 2012

Maybank may be able to raise RM2.64bil via shares placement

PETALING JAYA: Malayan Banking Bhd (Maybank) could potentially raise about RM2.64bil in a bid to further strengthen the bank's capital base and facilitate to meet more stringent capital requirement under the Basel III framework.

It intends to place out 300 million shares or 3.68% of its capital base at an indicative placement price of RM8.80 per share.

In filings with Bursa Malaysia, the country's largest bank said the assumption of the issue price was based on a 3% discount to the weighted average market price of Maybank shares for the five market days up to Oct 4 of RM9.0757.

Maybank says a possible upsize of the placement will depend on investors’ demand.

“The final number of new Maybank shares to be issued and the issue price of the shares will only be determined and announced after the completion of the book-building process, which will commence on Friday,” it said.

It said there is also possible upsize of the placement depending on investors' demand.

“The board is of the view that the proposed private placement is the most expeditious means of strengthening the company's capital base,” it said.

Maybank said the proceeds from the share sale, net of expenses relating to the exercise, would be utilised for working capital and general banking purpose.

The bank ended the day nine sen, or 1%, lower at RM8.99 yesterday.

In line with the world's adoption to Basel III, banks across the world would have to have a common format for disclosing the size and quality of their capital safety buffers from 2013 to help reassure investors they are stable.

It would also force banks to hold more capital and liquidity from 2013 onwards and will require banks to hold at least 7% of core Tier 1 capital in the form of retained earnings or pure equity.

Recently, Maybank had also succeeded in pricing its US$800mil (RM2.4bil) Regulation S Tier 2 Capital Subordinated Notes under its US$5bil multicurrency medium term note programme. The proceeds from the notes were also used for working capital, general banking and other corporate purposes, the bank had said earlier.

The subordinated notes wereexpected to qualify as Lower Tier 2 capital as per the Bank Negara's guidelines and be eligible for Basel III transitional treatment.

It is the largest regulation US dollar lower tier 2 capital issuance by anAsian Bank outside Japan and also marked the largest ever US dollar bond issuance by a Malaysian financial institution.

The said transaction was priced at 5-year US Treasury + 260 bps or a yield of 3.254% and will pay a coupon of 3.25% per annum, to be paid semi-annually in arrears.

The subordinated notes had a tenure of 10 years from the issue date on a 10 non-callable 5 basis, maturing on Sept 20, 2022.

http://biz.thestar.com.my/news/story.asp?file=/2012/10/6/business/12134243&sec=business

Maybank falls on US$1.2b share offer

Monday, 08 October 2012 16:16

Maybank falls on US$1.2b share offer

Shares of Malayan Banking Bhd (Maybank) dropped as much as 0.67 percent after the largest bank by assets in Malaysia said it would raise US$1.2 billion with a new share offer to fund growth in the country and its regional subsidiaries.

“This sounds logical to us as Maybank may be required to bring in capital if it is required to locally incorporate its Singapore subsidiary, which currently holds a qualified full banking licence,” HwangDBS Vickers Research said in a note on Monday.

Maybank said on Monday it completed the bookbuilding exercise for the private placement, the largest so far in Malaysia’s corporate history.

The placement is a proactive move to boost Maybank’s equity capital ahead of the implementation of the stringent new solvency requirements of the Basel III global banking regulations, Maybank said in a statement.

The issue price was fixed at RM8.88 a share, Maybank said, while the total number of shares to be issued represents 4.98 percent of the enlarged issued and paid-up share capital of Maybank as at Sept. 30.

The private placement exercise is expected to be completed no later than the middle of October, added Maybank.

HwangDBS maintained its "buy" rating on Maybank stock with a target price of RM11.10.

“Maybank remains our top pick and we believe our investment thesis of high dividends and strong earnings momentum remains intact despite these developments,” said HwangDBS.

The stock was down 0.56 percent at RM8.94, underperforming the broader index’s 0.15 percent drop.

-- REUTERS

Maybank plans US$1.2b share offer, says IFR

October 05, 2012

HONG KONG, Oct 5 — Malayan Banking Bhd (Maybank), the country’s largest lender, is seeking to raise up to US$1.2 billion (RM3.7 billion) with a new share offer, capital markets news service IFR said today.

Banks in Southeast Asia are beefing up core capital to accommodate the rapid growth in lending in the region and to meet the stringent new solvency requirements of the Basel III global banking regulations.

The fund raising comes just a week after sources told Reuters that Maybank was among the potential bidders approached by US conglomerate General Electric Co to sell its US$1.6 billion stake in Thailand’s Bank of Ayudhya. .

Maybank is offering 300 million new shares, in a range of 8.8-8.9 ringgit each, a discount of up to 3 per cent to the average trading price over the previous five days, said IFR, a Thomson Reuters publication, citing a term sheet for the sale.

Maybank’s shares closed today at 8.99 ringgit, trading on a price-to-earnings ratio of around 12.56, which compares with a median of 12.32 for all Malaysian banks.

The new funds will be used to strengthen the company’s capital base, support its “growth objectives” and meet the Basel III capital requirements, IFR said.

The offer can be expanded by an additional 112 million shares depending on the strength of demand, it added.

Maybank’s offering adds to Malaysia’s flourishing capital market deals this year with the tally for share offers at US$7.3 billion, accounting for nearly one-quarter of all new listings in Asia-Pacific and well up from about US$1.8 billion in Malaysia in the same period last year.

Maybank and UBS are managing the share offer, IFR added. — Reuters

Call for more time to 'tweak' Basel III

By Rupa Damodaran
Published: 2012/10/15


Malaysia's top two banks, Malayan Banking Bhd (Maybank) and CIMB Group Holdings Bhd, say the Basel III package of measures to strengthen the global financial system needs more scrutiny and are calling for more time to "tweak" the new regulations.

One of the deepest concerns is that the banking sector could lose investor appeal, Maybank said at the Institute of International Finance annual meeting here.

The Basel III package of measures will see a gradual phase-in of the standards from next year until 2019.

"The consultative papers have been placed with the central banks," said Maybank president and chief executive officer Datuk Seri Abdul Wahid Omar.

Overall, while there are some elements like trade finance and small and medium enterprises (SMEs) that can be tweaked, the banking sector must be prepared for Basel III.

"We saw it as an eventuality and that was why we raised US$1.2 billion (RM3.66 billion) blanket capital to make sure we are prepared," he said in reference to last week's successful completion of a bookbuilding exercise in relation to its private placement.

He called for a level playing field, arguing that the risk weighted assets of European banks are between 20 per cent and 30 per cent, one third that of Asian banks, which measure at between 50 per cent and 60 per cent.

CIMB Group chief executive Datuk Seri Nazir Razak said there are details that need to be looked into as well as Basel III's implications on the banking landscape.

Basel III, he said, is crafted in the context of problems in the West, which is heavily reliant on a global ratings framework that is biased against developing countries.

Nazir said further scrutiny shows that the new regulations will be disadvantageous to Asian banks.

"It places excessive liquidity requirements on Asian banks when there is so much of liquidity in the region and likewise, there is too much emphasis on government bonds when there is enough in Asia."

Smaller banks also stand to suffer as Basel III means heavy compliance costs.

"The West wants to deleverage but Asia has a huge appetite for funds and we need to intermediate that or, otherwise, it will be counter-productive," said Nazir.

Asian banks will need to boost their cooperation and make sure Basel III does not impact their capacity to give out funds.

Australia and New Zealand Banking Group Ltd CEO Michael Smith suggested providing degrees of flexibility (to adopt Basel III), according to the various nations.

Most Asian banks can meet all the targets under Basel III, unlike their European counterparts, some of which will find it difficult to impose the capital requirement.

A more pragmatic approach is needed, he said, adding that the economic structure of Asia is different.

"The sheer amount of liquidity moving around the world due to the monetary easing of central banks in Europe or the United States creates an issue in Asia as investors chase the yields," said Smith.

The shift from Basel 1 to Basel II took 20 years while the shift from Basel II to Basel III took 18 months.

Wahid said Asean, which has set a target to become the Asean Economic Community by 2015, needs to be served by well-capitalised and well-distributed regional banks.

Apart from Maybank, CIMB and Public Bank of Malaysia, there are the DBS Bank, OCBC Bank and UOB Bank from Singapore and the Bangkok Bank of Thailand.

He is looking to Indonesian banks next to expand their reach to other Asean countries.

Read more: Call for more time to 'tweak' Basel III http://www.btimes.com.my/Current_News/BTIMES/articles/20121014225945/Article/index_html#ixzz29sjy9r6D

Basel III to spur secondary loan activity

Thursday October 18, 2012

KUALA LUMPUR: The implementation of Basel III next year will encourage secondary loan market activity, said CIMB Group deputy executive officer of corporate banking Datuk Lee Kok Kwan at the Asia Pacific Loan Market Association’s Malaysia conference.

Basel III, a global regulatory standard imposed by the Basel Committee on Banking Supervision, which includes representatives from 20 major world economies, requires banks to hold an increased 4.5% of common equity and 6% of Tier-1 capital of risk-weighted assets, according to the Bank for International Settlements.

Lee explained that under the proposed guidelines on Single Counterparty Exposure Limit in the region, banks will be required to observe prudential limits including a maximum 25% exposure to a single counterpart from a bank’s capital base, and a total exposure (set at 10% of a bank’s capital base) not exceeding six times the capital base.

Also, credit concentration risk will be re-examined by national regulators.

Basel III would result in higher capital requirements for longer tenor loan and bonds, in addition to more punitive liquidity requirements, he said.

“Under Basel III, banks will need to distribute and sell down loans in order to free up capital and liquidity to pursue new lending opportunities, thus leading to increased secondary loan market activity,” Lee said. — Reuters