Commerce sets out strategy to become regional bank

Commerce sets out strategy to become regional bank

Eileen NG, Associated Press, Kuala Lumpur

Malaysia's second-largest banking group on Monday announced a
major restructuring to consolidate its assets - including an
Indonesian bank and a stockbroking firm in Singapore - as part of
an ambitious plan to become a regional banking giant.

The revamp of Commerce Asset-Holding Bhd. will create an
enlarged group with assets of around 100 billion ringgit (US$26.3
billion). The move is driven by the need to venture abroad to
remain competitive as the domestic financial services market
gradually liberalizes, officials said.

"We want to be Malaysia's financial services regional
champion," said Nazir Razak, who heads the enlarged banking
group.

Nazir, the youngest brother of Malaysian Deputy Prime Minister
Najib Abdul Razak, is widely credited with turning CIMB Bhd., a
72-percent owned listed unit of Commerce Asset-Holding, into
Malaysia's top investment bank.

The restructuring plan involves integrating CIMB Bhd. and
Commerce Asset's wholly-owned commercial bank, Bumiputra-Commerce
Bank Bhd. under the CIMB brand name.

Eventually, its 61-percent owned Indonesian arm, PT Bank
Niaga, will also be subsumed under the CIMB brand to give it the
financial muscle to expand regionally.

"In banking, it is clear that there is a premium to size. We
will look to acquire and expand our franchise in the region,"
said Nazir, CIMB's current chief executive.

The group may diversify into other markets such as Thailand as
well as grow its presence in Indonesia and Singapore, he said.

The restructuring will see Commerce Asset narrow the gap with
the country's top banking group Malayan Banking Bhd., and put it
on a stronger footing to compete with regional financial groups
such as Development Bank of Singapore.

Nazir said the revamp would also prime the group for possible
further domestic consolidation.

Malaysia's 10 banking groups, which lag behind their Southeast
Asian rivals, are under pressure to merge and tap new markets
abroad to enhance their competitiveness as Malaysia's heavily
protected financial sector gradually opens up to foreign
competition.

Under the revamp due to be completed by year-end, CIMB will
acquire Bumiputra-Commerce Bank and all its units, including its
newly acquired brokerage business of Singapore's G.K. Goh Ltd.,
from Commerce Asset.

CIMB will then be taken private and de-listed from the
Malaysian stock exchange, while Commerce Asset will be renamed
Bumiputra-Commerce Holdings Bhd.

The exercise is believed to be driven by the key shareholder,
Malaysia's state investment arm Khazanah Nasional Bhd., which in
March raised its stake in Commerce Asset to 22 percent from 12
percent, to make the group into its flagship financial
institution to help Malaysia-owned businesses offshore.