Maybank Says M&A an Option to Access Thai Growth: Southeast Asia

Malayan Banking Bhd. (MAY), Malaysia’s largest lender, is considering options to expand in Thailand including takeovers after raising 3.66 billion ringgit ($1.2 billion) this month to boost its presence in Southeast Asia.

“There are a number of options we are assessing at the moment,” Chief Executive Officer Abdul Wahid Omar, 48, said last week in an interview in Tokyo. “Our default position is to look at opening a branch there by 2014, but if there are other interesting opportunities we’ll be open to look at them.”

Malayan Banking, also known as Maybank, is competing with Southeast Asian rivals that are reducing reliance on their home markets through acquisitions in the region’s faster-growing countries. The company, which already controls PT Bank Internasional Indonesia (BNII) and owns smaller stakes of lenders in Vietnam and Pakistan, bought Singapore brokerage Kim Eng Holdings Ltd. last year.

Maybank earned 28 percent of pretax income from overseas operations in the six months through June 30 and plans to generate 40 percent of operating profit from abroad by 2015, Wahid said last year, adding that he wants the bank to enter all of Southeast Asia’s major markets by then.

“It’s hard to grow organically in Thailand,” Lim Sue Lin, an analyst at HwangDBS Vickers Research Sdn., said by phone in Kuala Lumpur. “It’s better for them to get ready infrastructure and distribution channels via an acquisition. It helps if the target has a good local franchise.”

Shares of Maybank have risen 4.1 percent this year, underperforming a 7.8 percent gain in the benchmark FTSE Bursa Malaysia KLCI Index. The stock fell 0.1 percent to 8.93 ringgit at the midday break in Kuala Lumpur.

“It is our intention to have a full presence across all the 10 countries in Southeast Asia,” Abdul Wahid said in an interview on Oct. 12. “Within that context, the idea of raising additional capital is meant to enable us to grow a bit more aggressive in markets like Indonesia, the Philippines and later possibly into Singapore.”

Expansion Funding

Abdul Wahid, who was attending the Institute of International Finance’s annual meeting in Tokyo, reiterated that proceeds from its Oct. 8 share sale are not meant for making a bid for Bank of Ayudhya Pcl in Thailand.

General Electric Co. (GE) said last month that it’s reviewing options for its remaining stake in Bangkok-based Bank of Ayudhya after selling an initial 7.6 percent. Singapore’s Oversea- Chinese Banking Corp. (OCBC) and Malaysia’s CIMB Group Holdings Bhd. (CIMB) are considering bidding for the stake, people familiar with the matter said Oct. 5.

“The lack of interests on GE’s stake is reasonable given that Maybank would prefer to own a majority stake,” said Cheah King Yoong, an analyst at Alliance Financial Group Bhd. (AFG) in Kuala Lumpur. “A smaller cap Thai bank, which provides Maybank with a majority stake and absolute control, could serve as a more attractive acquisition alternative.”

Other banks on the takeover path in Southeast Asia include DBS Group Ltd. (DBS), the region’s biggest lender. DBS said on April 2 that it offered to buy PT Bank Danamon Indonesia for about $7.2 billion.

CIMB Group, Malaysia’s second-largest lender, in May agreed to buy a 60 percent stake in Bank of Commerce in the Philippines after making acquisitions in Thailand, Indonesia and Singapore over the last seven years.

To contact the reporters on this story: Aika Nanao in Tokyo at ananao@bloomberg.net; Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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