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.