This article first appeared in The Edge Malaysia Weekly on February 7, 2022 - February 13, 2022

ALLIANCE Bank Malaysia Bhd could be the next lender to see a leadership change as its CEO Joel Kornreich’s contract is set to expire at the end of this year, sources say.

The Edge understands that the lender, the smallest of eight local banking groups by asset size, has already begun the process of looking for his replacement.

“There is a search going on for candidates,” one source tells The Edge.

Kornreich, a Belgian, has been with the bank for over seven years now, since being appointed to the group CEO role on Jan 1, 2015. Prior to joining the Alliance banking group, he was with Citigroup for 20 years in various roles across the world.

The 56-year-old is also an executive director of Alliance Bank’s Islamic banking subsidiary, Alliance Islamic Bank Bhd.

When contacted, Kornreich declined to comment on his CEO position, but confirmed that his current contract runs until the end of this year.

“I definitely want to see through the end of my contract. After that, it’s the board’s decision,” he tells The Edge.

Alliance Bank is backed by Singapore state investor Temasek Holdings Ltd. Temasek’s interest in the bank is held through Duxton Investments Pte Ltd, which holds 49% of Vertical Theme Sdn Bhd, which in turn holds a direct 29.06% stake in the bank.

The remaining 51% stake in Vertical Theme is held by Langkah Bahagia Sdn Bhd, which is owned by Singapore hotelier Ong Beng Seng, Ong Tiong Sing and corporate adviser Seow Lun Hoo.

The other substantial shareholder of Alliance Bank is the Employees Provident Fund, which held a 13.7% stake as at Jan 19.

Under Kornreich, Alliance Bank has deepened its niche in SME (small and medium enterprise) banking amid stiff competition from bigger banks such as AMMB Holdings Bhd that are also aggressively growing in that segment. The former is aiming to be among the top four banks in Malaysia in terms of SME loans.

“Right now, our market share of loan balances is just getting past the 5% mark. Three years ago, we were less than 3.5%. For us to be top four, it would require us to get to around 9%. The way we intend to do that is, we’re beefing up the teams, we’ve launched digital SME and, of course, we’ve digitised much of the SME business. We see that we have momentum, so we think we can make that happen,” Kornreich told The Edge in an interview last December.

On Dec 2, the bank announced that it would sell its stockbroking business to Philip Futures Sdn Bhd. Upon completion of the deal in the first half of this year, Alliance Bank will be the only local banking group without stockbroking operations.

Given its small size, the bank is often seen as a takeover target. Nevertheless, analysts say there is no urgent need for it to be merged with another. Over the last five years, the group’s net profit peaked at RM538 million in the financial year ended March 31, 2019 (FY2019), before coming down to RM424 million in FY2020 and RM359 million in FY2021.

The speculated change at Alliance Bank comes amid a slew of other upcoming leadership changes in the banking industry.

Late last month, the country’s largest lender, Malayan Banking Bhd (Maybank), announced that Datuk Khairussaleh Ramli will be made its new president and CEO from May 1.

Khairussaleh, who is RHB Bank Bhd’s group managing director/CEO, had already tendered his resignation from the fourth-largest lender — effective March 25 — and is currently on a leave of absence.

He will be taking over from Maybank’s current chief, Datuk Seri Abdul Farid Alias, who is leaving the group on April 30. Abdul Farid, who has held the post for over eight years, since August 2013, had earlier this year indicated to the board that he would not be seeking a renewal of his contract, which expires Aug 1, as he wished to pursue his own interests.

Meanwhile, RHB has initiated its transition plan and the selection process for a new CEO is currently ongoing.

Over at AMMB, chairman Tan Sri Azman Hashim wants to retire from the sixth-largest lender on March 31, which is the end of its financial year. He will be given a new role as chairman emeritus/honorary adviser and remains a major shareholder of the group. AMMB said it would announce the appointment of a new chairman in due course.

Apart from these three banks, foreign lender HSBC Bank Malaysia Bhd on Jan 12 appointed Omar Siddiq as its new CEO to succeed Stuart Milne, who is retiring. Omar was CIMB Group Holdings Bhd’s CEO of group wholesale banking and the deputy CEO of CIMB Bank Malaysia.

There could also be changes at development financial institution Bank Pembangunan Malaysia Bhd. The Edge reported in its Jan 17 issue that there was speculation that CEO Arshad Mohamed Ismail could be coming to the end of a three-year term and may be looking to leave.

“It is not often the industry sees so many leadership changes in one year,” a banking analyst remarks.

The new leaders will be coming into their roles at a time the industry is seen recovering after two years of taking a hit from the Covid-19 pandemic. Analysts expect banks to do better this year on the back of a recovering economy, a potential hike in interest rates and lower provisions. However, there remain many challenges as coronavirus variants still pose a risk.

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