MBSB CEO keeps mum about MBSB-AFB merger

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) president and chief executive officer (CEO) Datuk Ahmad Zaini Othman (pictured) kept mum about questions yesterday about the potential merger and acquisition (M&A) of MBSB with Asian Finance Bank (AFB), saying only it is now a shareholder matter.

“As far as management is concerned, it is business as usual at MBSB. This is something that management cannot really comment until shareholders give us the green light,” Ahmad Zaini said yesterday.

“At the end of the day, in any corporate exercise, it’s all about the pricing. If the pricing is right, then I suppose it’ll be okay,” he added.

After Malaysian Industrial Development Finance Bhd’s (MIDF) plan to buy over AFB fell through earlier this year, news reports, citing sources, have said both MBSB and AFB are now awaiting Bank Negara Malaysia’s (BNM) approval to start official negotiations.

In its latest publication for the week of Dec 5 to Dec 11, The Edge weekly reported that both parties are in exploratory M&A talks and that they had written in to seek the central bank’s approval in early November.

Also citing sources, the weekly said the main reason the previous AFB-MIDF deal did not materialise was because the parties could not agree on the pricing.

Asked to confirm if MBSB had submitted such an application to BNM, Ahmad Zaini said he is not in a position to reveal any information.

“If shareholders decide that we should be doing [some] corporate exercises, management’s role is just to facilitate [any such decisions]. As for matters of M&A, [as management,] I cannot comment,” Ahmad Zaini said.

Meanwhile, Ahmad Zaini said the group wants to expand its corporate-property-based loans.

“Unlike a banking financial institution, the products we can offer are limited. We cannot offer trade lines or other similar facilities, so the only thing we can do well is property. We are reshifting our corporate portfolio — right now, MBSB is heavy on the retail side. We started shifting our emphasis to more corporate lending since two years ago,” he said.

Ahmad Zaini said MBSB intends to have a 70:30 ratio mix for its loan portfolio, being 70% retail and 30% corporate lending, citing that the ratio is the right mix for a financial institution and that it would help it achieve balanced income. The loan ratio mix is now at 80:20.

“We hope to achieve this in the next one to two years,” he added.

He was speaking after inking an agreement with EcoFirst Consolidated Bhd on behalf of MBSB to provide the developer financing facilities worth RM189.95 million to fund the land purchase and development of the latter’s RM5 billion Ampang Ukay project.

In a statement, EcoFirst group CEO Datuk Tiong Kwing Hee said the funding will enhance EcoFirst’s capabilities to achieve its vision of Ampang Ukay as Kuala Lumpur’s “Little Hong Kong”.

EcoFirst said the funds will finance the development of Liberty Arc @ Ampang Ukay, under the first phase of the Ampang Ukay development. Liberty Arc comprises three towers with 1,632 units of small office home office and 32 retail units.

Ampang Ukay will cover 87 acres (35.21ha) of prime land in total — once the acquisition of another 25.3 acres of land is completed. EcoFirst expects the project to sustain its growth for the next 12 years.

This article first appeared in The Edge Financial Daily, on Dec 6, 2016. Subscribe to The Edge Financial Daily here.