KUALA LUMPUR (Sept 27): The China Banking Regulatory Commission has given CIMB Group Holdings Bhd approval to divest 18.21% of its stake in Bank of Yingkou Co Ltd (BYK) to Shanghai Guozhijie Investment Development Co Ltd.
 
In a filing with Bursa Malaysia today, CIMB said the regulatory commission had given its nod via a letter yesterday.
 
On Dec 30 last year, CIMB announced plans to divest its BYK stake for RM972 million, saying its venture with the Chinese bank was one of the group’s best investments, but that holding on to the stake will cost CIMB too much, in time.
 
CIMB has shared RM651 million worth of profit from BYK between 2009 and 2016. In the first nine months of 2016 alone, BYK brought in RM93 million in profits to CIMB.
 
But CIMB group chief executive Tengku Datuk Sri Zafrul Aziz had said capital requirements for minority investments in other banks such as BYK had continued to increase, so much so that in time, the returns threshold required to justify this investment would be too high.
 
Zafrul noted the disposal would be in line with CIMB’s plan to focus on its core business in its core markets, based on Target 18, the group’s strategic review exercise that was initiated in 2014.
 
According to a note by AmInvestment Bank Bhd on Jan 3, CIMB acquired a 19.99% stake in BYK for RMB348.8 million in cash in April 2009. Based on its estimates, the one-off gain is expected to be about RM760 million.