Maybank grossly overpaid for BII acquisition?

Amirsham Maybnak CEO in 2008

Maybank lost billions in BII acquisition’

Lisa J. Ariffin | July 23, 2013

DAP's Tony Pua urges Prime Minister Najib Tun Razak to look into Maybank's acquisition of Bank International Indonesia to determine possible reckless abuse of power. UPDATED KUALA LUMPUR: Maybank Berhad has incurred losses amounting to billions of ringgit since its record acquisition of Bank International Indonesia (BII) in 2008, a DAP MP claimed today. Petaling Jaya Utara MP Tony Pua today disclosed that Maybank had “quietly” disposed of 5,065,380,000 ordinary shares to a third party investor on June 20 at Rp355 per share – a significant 21.9% lower than the cost of acquisition. “This 9% (of the issued and paid-up share capital) stake sale will immediately translate to an estimated realised loss of RM157 million. And if these loss is extrapolated, Maybank could be looking at a potential loss of RM1.74 billion,” Pua told a press conference today. He also said that Maybank was “staring at a staggering paper losses of RM2.5 billion” as a result of the acquisition, namely when BII shares closed at Rp315 or 30.7% drop from the acquisition price as of last week. In 2008, Maybank acquired BII at the cost of RM8.25 billion at approximately Rp455 per share and was flayed by critics for paying more than four times the asset value of BII. “In reality, as at Dec 31, 2012, Maybank has already made impairments of RM1.62 billion for the acquisition. This is from Maybank records itself,” he said. He noted that since the acquisition, the return on Maybank’s investment has been abysmal at -0.17%, 1.86%, 2.31% and 6.27% in 2009, 2013, 2011 and 2012 respectively. “Despite the above, in the announcement to Bursa Malaysia, Maybank has claimed that ‘the disposal will not result in any material financial impact to the group’,” Pua said. “However, evidence points to the contrary and in the light of billions of ringgit of losses incurred by Maybank… it is crucial now for Maybank to come clean,” he added, referring particularly to the disposal of 9% of shares. He then explained that Maybank was under pressure to sell its stake in BII due to the Indonesian stock market regulation which requires that at least 20% of BII’s shares to be “free float”. “This condition was imposed by the Indonesian authorities and accepted by Maybank when BII was acquired in 2008,” he said. “More losses will likely be realised when Maybank is forced to sell another 8.3% of BII shares to third parties by Dec 31, 2013, the new extended deadline granted,” he added. ‘Good for the country’ Pua then urged Prime Minister Najib Tun Razak, who is also Finance Minister, to “personally look into this matter”. “We call upon (Najib) to personally look into the matter, whether the cause of losses was ‘a bad business decision’ or possibly a reckless abuse of power,” he said. “Whichever the cause, action must be taken against those found at fault so that the rakyat’s interest in Maybank Bhd will continue to be protected.” In 2008, then prime minister Abdullah Ahmad Badawi defended the acquisition claiming that “the government is confident that the management of Maybank and its board of directors have made the purchase not only in the best interest of Maybank but also for the country”. Najib had insisted then that the “move was still a good one for the country”. In 2012, Maybank chairman Megat Zaharuddin Megat Mohd Nor told Reuters that Maybank is “not going to sell down if we’re going to make a loss compared to what we thought it should be”. Zaharuddin, who is also BII’s president commissioner, said the bank will not sell BII’s stake below Rp510 per share, the price it paid to buy the bank in 2008 before discount.