By Yantoultra Ngui
SINGAPORE (Reuters) – DBS Group Holdings Ltd, Singapore’s largest lender, is considering expanding into Malaysia through potential acquisitions of stakes in banks in the neighboring country, including one of Malaysia’s smallest banks by assets, according to two sources familiar with the matter.
DBS is looking into acquiring Singapore state investor Temasek’s 29.1% stake in Alliance Bank Malaysia Bhd, valued at approximately $460 million, the sources said. Temasek is DBS’s largest shareholder with a 28.9% stake, as per LSEG data.
Other options for DBS to enter the Malaysian market include purchasing Kuwait Finance House’s Malaysian retail banking assets, which are estimated to be worth over $500 million and are currently up for sale, one of the sources mentioned.
While discussions are still in early stages, any formal negotiations for a stake acquisition in a Malaysian bank would require approval from the Malaysian central bank, Bank Negara Malaysia, the sources added.
The sources, who requested anonymity due to the confidential nature of the talks, stated that DBS and Temasek declined to comment on the speculations. Alliance Bank and Bank Negara Malaysia did not respond to requests for comments. Kuwait Finance House mentioned that the process for selling its retail banking portfolio in Malaysia was in preliminary stages.
DBS is the only Singaporean bank without a retail banking presence in Malaysia, while local competitors Oversea-Chinese Banking Corporation and United Overseas Bank both operate retail banking operations in the country.
The potential move by DBS to expand into Malaysia comes amidst positive economic outlook for the Southeast Asian nation, with anticipated credit growth due to new infrastructure projects and investments.
Malaysia’s economy grew by 5.9% in the second quarter, its fastest rate in 18 months, driven by increased household spending, exports, and investment. The Malaysian ringgit is the best-performing currency in Southeast Asia this year.
Under outgoing CEO Piyush Gupta, DBS has become a regional banking powerhouse through strategic acquisitions in markets like China, India, Indonesia, and Taiwan. Gupta’s successor, Tan Su Shan, is set to take over in March next year.
In its latest financial report, DBS posted its highest quarterly net profit ever for July-September, supported by record fee income.
DBS had previously attempted to acquire Temasek’s stake in Alliance Bank in 2012, but the plans fell through due to regulatory challenges. The current Malaysian government under Prime Minister Anwar Ibrahim is reportedly more receptive to ideas and investments aimed at fostering economic growth.