This article first appeared in The Edge Financial Daily on January 24, 2018

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB), which has secured its shareholders’ nod for its proposed acquisition of Asian Finance Bank Bhd (AFB) at an extraordinary general meeting (EGM) and court-convened meeting yesterday, says there would be no staff lay-offs “except for one or two management staff”.

“We are not laying off anybody, except for one or two management staff under contract. There will be no VSS or MSS at this stage. In terms of fitting the manpower, we have engaged our HR consultant to look at the best fit for the new bank. This will primarily be for the management. We hope to complete staff integration by March this year,” said MBSB president and chief executive officer Datuk Seri Ahmad Zaini Othman.

With the shareholders’ approval, MBSB will be acquiring AFB for RM644.95 million, a deal that would give the non-bank lender a licence to become a full-fledged Islamic bank. The merger will create the country’s second largest Islamic bank, with total assets of some RM48 billion.

Ahmad Zaini said MBSB had already started the group’s integration with AFB, and will look out for new business opportunities from now on.

“One of the key opportunities we are looking at is making inroads into the trade finance business platform and also funding opportunities for the CASA accounts. We are also looking into other businesses with fee-based income,” he told reporters yesterday.

However, MBSB is not looking to expand operations at this juncture as the focus is on maximising its existing 44 MBSB and two AFB branches. Some of the branches may also be relocated to make operations more efficient.

“This is not an acquisition to expand our assets; this is about acquiring the bank for the licence. Now, we have the opportunity to look at some of the business streams like trade finance — areas that we have not been able to explore.

“We expect some impact on earnings this year, but there will be more next year and the year after as we plan to introduce new types of businesses and services,” said Ahmad Zaini.

There will also be a rebranding exercise, he said, with a new identity that reflects both MBSB and AFB to be launched sometime in April this year. “There will definitely be a name change, but we can’t reveal it yet. The new name has to be endorsed by the central bank, so it’s not up to shareholders.”

On the group’s plans going forward, he said: “Unfortunately, we can’t reveal a lot of our plans or how we intend to grow the business, but it will come in phases. Over the next 12 months, you will see some announcements on things and initiatives we are putting forward.”

The EGM yesterday also secured shareholders’ approval for MBSB to transfer its identified syariah-compliant assets and liabilities to AFB, with its conventional assets and liabilities to be converted first before the transfer.

Ahmad Zaini said the conversion will not be an issue as Bank Negara Malaysia has provided that it be completed within three years, which is more than enough time.

“For conventional assets held by corporate clients, there is no issue as 100% of them will be doing the conversion. For the retail side, we have a mechanism and process, which will see the conversion take place after a certain amount of time.

“Of course, this is all done with customers’ full knowledge. It’s not something we do behind their backs. We do need to engage with customers and see how the conversion takes place,” he said.

He added that only “clean” assets will be transferred, which exclude assets under distress, such as non-performing loans.