- The press recently
reported Bank Negara Malaysia (BNM) governor Tan Seri Zeti Akhtar Aziz as
confirming that the Financial Services Act (FSA) will not affect the
shareholdings of Public Bank (PBB), Hong Leong Bank (HLBB) and AMMB Group
Holdings (AMMB).
- The FSA, which will
be enforced from mid-2013, has reiterated that the limit on individual shareholding
is 10%, which is the same limit under the Banking and Financial Institutions Act
(BAFIA).
- To recap, Tan Sri
Teh Hong Piow’s stake in PBB is 24.1%. Tan Sri Quek Leng Chan’s effective stake
in Hong Leong Financial Group (HLFG) is 78.3%. HLFG in turns holds 63.5% in
HLBB.
- The governor said
that the FSA will not affect the shareholding in banks like PBB, HLBB and AMMB
as the stakes were held even before the BAFIA was implemented in 1989.
- The governor added
that the shareholding limit will affect those who acquired more than 10% after
the implementation of BAFIA.
- The FSA will
provide the central bank with more legal and enforcement powers in its actions
to enhance governance and regulation.
- We believe the
share prices of both HLBB and PBB are already reflecting expectations on the
existing shareholding structure to remain.
- Thus, the
confirmation that the individual shareholders of PBB and HLBB are not required to
reduce their shareholding to a maximum of 10% under the FSA is likely in-line
with our and market expectations.
- However, the
confirmation is positive as it removes any further speculation over the possibility
of the individual shareholders of both banks being required to pare down their stakes,
post implementation of the FSA.
- We remain
overweight on the sector.
Source: AmeSecurities
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