DBS Group’s intentions to acquire a substantial stake in Alliance Bank Malaysia have encountered delays, primarily due to the absence of regulatory approval, reported Bloomberg, citing sources familiar with the developments.
Both DBS, one of the top banks in Singapore, and Vertical Theme, the major shareholder of Alliance Bank, submitted separate requests to Malaysia’s central bank around eight months ago.
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However, they have yet to receive any response from the regulator, said the sources.
Malaysian regulations necessitate obtaining approval before initiating any discussions.
Acquiring a stake in Alliance Bank would expand DBS’s presence in Malaysia, a market where other Singaporean banks such as Oversea-Chinese Banking Corporation and United Overseas Bank are already established.
The deal is also in line with DBS’ strategy to set up a retail banking presence in the Southeast Asian market.
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By GlobalDataIn January, the publication highlighted that Vertical Theme, a Malaysian holding company supported by Singapore’s state investor Temasek Holdings, was contemplating the sale of its 29% share in Alliance Bank to DBS.
Should the transaction proceed, DBS might aim to increase its stake in Alliance to as much as 49% through a voluntary partial general offer, the sources indicated.
The current regulations in Malaysia restrict foreign ownership in commercial banks to 30%, but there have been discussions regarding potential relaxations in this cap across certain sectors, they added.
One source noted that if DBS fails to secure approval to acquire up to 49% of the Malaysian bank, the deal is unlikely to advance.
Discussions are still in progress, and no definitive decisions have been reached, the sources added.
Representatives from DBS and the backers of Vertical Theme opted not to comment, while Alliance Bank stated it was unaware of the situation.
Bank Negara Malaysia, the nation’s central bank, refrained from commenting on individual applications or the acquisition or divestment of shares in its regulated entities, citing policy reasons.
The central bank clarified that applications concerning the shareholding of licenced banks, including those from foreign entities, are evaluated as per the relevant provisions under the Financial Services Act 2013 and the Islamic Financial Services Act 2013.
