KUALA LUMPUR (Dec 17): RHB Bank Bhd has proposed a dividend reinvestment plan (DRP) offering shareholders the option to reinvest their cash dividend in new RHB shares. 

With the DRP, whenever RHB declares a dividend payment, shareholders will have the option to reinvest all or part of such dividend in DRP shares, instead of getting cash, the bank said.

The shareholders would also have the option to not participate in the DRP and opt for cash dividend like usual, added RHB in a filing with Bursa Malaysia. 

The plan, it said, will potentially result in cash retention for the group, which may later be utilised for working capital, repayment of borrowings, and other uses. 

“The reinvestment of dividend by the shareholders for DRP shares will also enlarge the share capital base of RHB," it added. 

The plan is also an opportunity for shareholders to enhance the value of their shareholdings in the bank by investing in DRP shares at a discount and from any future capital appreciation, said RHB.   

RHB said the expenses in relation to the establishment of the plan is estimated to cost the group RM450,000. 

At 3.25pm, shares of RHB stood one sen or 1.75% lower at RM5.60 with about four million shares traded.