Maybank hives off PNG operations for RM418m cash

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KUALA LUMPUR: Malayan Banking Bhd (Maybank) is exiting Papua New Guinea (PNG) by hiving off its entire equity stake in Maybank (PNG) Ltd (MPNG) and Mayban Property (PNG) Ltd (MPPL) to Kina Ventures Ltd for RM418 million.

In a statement, Maybank president and chief executive officer Datuk Abdul Farid Alias said the decision to dispose of its PNG operations was a result of regular strategic reviews to “re-prioritise” its capital and resources, with the intention of focusing its growth agenda on target regions where it can achieve the best returns from its investments.

Maybank has entered into a share sale agreement (SSA) with PNG-based stockbroking firm Kina Securities Ltd and Kina Ventures for the divestment of MPNG and MPPL, according to the statement.

“While we have been operating profitably and successfully in PNG over the years, we had to evaluate how best we can use our capital, going forward, especially in light of new and more stringent requirements under the Basel III [global banking framework] regime.

“Ultimately, we believe we could achieve greater value creation for our stakeholders by refocusing our resources in the Asean and Greater China regions, where we can realise greater synergies and achieve better returns on capital investment,” Abdul Farid said.

In a filing with Bursa Malaysia, Maybank (valuation: 1.45; fundamental: 1.5) said the SSA was signed following the central bank of PNG’s approval on May 12.

MPNG, established in 1994, and MPPL, were incorporated in PNG, and were involved in commercial banking activities and property investment, respectively. Both the companies, which were serving the local community and cross-border clients for the past 20 years, will cease to be subsidiaries of MBB with effect from the completion of the proposed disposal.

Abdul Farid said despite this, Maybank is still committed to serving customers in PNG, who have cross-border requirements and the bank will ensure a smooth transition to the new shareholders so that customers can enjoy uninterrupted services.

Maybank shares gained four sen or 0.43% at RM9.36 yesterday, with a market capitalisation of RM87.2 billion.

 

This article first appeared in The Edge Financial Daily, on May 19, 2015.