More than a year ago, Malaysia Today triggered the alarm bell by revealing that Maybank, a taxpayer-owned bank, was about to blow billions in a stupid deal. None of the politicians from Pakatan Rakyat took up the case though. Maybe they felt since it was Malaysia Today that revealed it then there was no need to panic. But NST and BT also reported the matter, although they tried to make it sound like a positive move. Now, everyone is trying to lock the stable door after the horse has bolted.

NO HOLDS BARRED
Raja Petra Kamarudin
Another RM2 billion loss?

By Hussein Hamid
http://blog.limkitsiang.com/, 9 September 2009

Tell me who would be stupid enough to go and buy a bank in Indonesia? You tell me who would do that? Then if that was not enough you go and take a running jump into Pakistan and buy another bank there. But wait there is more! While they are doing that why not pick up a bank in Vietnam. In all they spent an incredible RM10.8 billion to acquire these three banks. Who would be stupid enough to do this when Maybank has been advise AGAINST making the purchase? Maybank belongs to the Government and so they will take instructions from the Government.

Taking instructions from a Government run by idiots who thinks that Maybank is also Maybank. So in essence it is the Barisan Government that is stupid enough to go and buy three Banks in Indonesia, Pakistan and Vietnam for RM10.8 billion.

Now Malayan Banking has confirmed that it lost RM2 billion in this escapade. Now which UMNO guy made a few hundred million in commission from these purchases? Who are the usual suspects? Najib as the Minister of Finance has to be suspect number one – but if MACC does the questioning they will say that he is just ‘helping with inquires’. But Najib must beware that even helping with inquiries can be dangerous if Muhyiddin has anything to do about it.

Najib must have been advised by that Nor Mohamed Yaacob because he had experience of losing more billion when he was with Bank Negara – around RM30 billion in fact.
This latest escapades would have been hysterically funny if it had happened in one of those tin pot African country where you would need half the money in the Banks just to buy a loaf of bread. And of course as far as Najib is concern this is a ‘victimless crime’ because it does no physical harm to any person or property, or to which was in fact consented, and is currently illegal if based on statutory laws. As victimless as PKFZ and all those plundering of the nation resources. Well Najib I got news for you. The Rakyat now knows that in the end they pay !! That RM37.23 million Aidilfitri bonus for Felda – we all pay. That RN500 million for Razak Baginda – we pay. Soon you will be paying for this that you are now making the Rakyat pay…and then it will be Good Night for you.
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Maybank wins bid for Indonesia's BII
By Adeline Paul Raj
New Straits Times, 27 March 2008

MALAYSIA'S biggest bank, Malayan Banking Bhd (Maybank), has won a bid to take control of Bank Internasional Indonesia (BII) for US$1.5 billion (about RM4.8 billion), a major step for the lender to expand in the region. BII is Indonesia's sixth largest bank in terms of assets, with over 230 branches.

"This acquisition will transform our growth prospects in Indonesia and significantly enhance our regional presence," Maybank acting chief executive officer Datuk Aminuddin Md Desa told reporters at a briefing yesterday in Kuala Lumpur.
To comply with takeover rules, Maybank will also offer to buy the remaining 44 per cent of BII, which could push its total bill to US$2.7 billion (RM8.6 billion). It plans to fund this internally. The deal comes just days after it agreed to buy a 15 per cent stake in Vietnam's An Binh Bank for RM430 million.

Maybank's bid for BII, at 4.6 times book value, appears steep, an indication of the stiff fight from bigger rivals and limited opportunities in the region. Analysts said that it was probably the most expensive bank purchase ever in Indonesia. Research firms like Citigroup had expected it to pay US$1.8 billion (RM5.7 billion) for all of BII.

Aminuddin, however, believes it is worth paying the hefty premium to get a controlling stake in a crucial market like Indonesia. The country has no foreign shareholding limits and offers one of the highest growth potential in the region. "It's an opportunity we couldn't afford to miss," he said.

A Reuters report said Maybank had beaten Bank of China for BII, after Europe's biggest lender, HSBC, dropped out in the last leg of the race. According to Aminuddin, BII will start contributing profits in the third year after the deal is completed. Maybank's strategy is to tap the remittance business and, later, trade finance. With BII, revenue contribution from Maybank's international operations will jump to 30 per cent in the next one or two years from about 19 per cent currently, he said.

In the first stage of the BII deal, which could take three months to complete, Maybank will pay RM4.8 billion to buy all of Sorak Financial Holdings Pte Ltd, which holds 56 per cent of BII. Sorak is owned by Singapore investment arm Temasek (75 per cent) and South Korea's Kookmin Bank (25 per cent). Maybank will then make a RM3.8 billion offer to buy out BII's minority shareholders.

On whether Maybank intends to take BII private, Aminuddin said it was still too early to say as it would depend on how minority shareholders respond to the offer. He pointed out, however, that Indonesian law states that as long as there are at least 3,000 public shareholders, a company can be kept listed no matter what the public shareholding spread is. Maybank, whose shares traded at RM8.95 yesterday before being suspended for the announcement, expects to complete the entire deal in six months. Temasek is selling its stake in BII to comply with Indonesian laws that forbid a foreign investor from owning more than one bank.
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Temasek comes full circle with BII stake
Early this year, however, Temasek indicated that it was selling its BII stake. Eventually, an agreement to sell the stake to Maybank for US$1.1 billion was announced in March.

Business Times, 11 August 2008

Temasek Holdings’ trouble-plagued bid to sell a stake in Indonesia's PT Bank Internasional Indonesia to Malaysia's Maybank holds a significance beyond the deal itself. More than just a transaction gone awry, it also reflects the changing realities facing the Singapore investment company.

The story of BII in Temasek's portfolio, in fact, says a lot about the shifts in its investment history over the last few years.

It will not be too much of an exaggeration to say that the road to Barclays and Merrill Lynch started with two Indonesian banks in the early 2000s. BII was one of the first major overseas investments by Temasek. Back in 2003, Temasek led a consortium called Sorak Financial Holdings, which also included Kookmin Bank, Barclays and Swiss-based ICB Financial Group Holdings, to clinch ownership of BII after reaching an agreement with the Indonesian Bank Restructuring Agency (Ibra).

Sorak paid 1.9 trillion rupiah (S$380 million at the time) for a 51 per cent stake in BII. The BII acquisition came just after Temasek and Deutsche Bank acquired a 62 per cent stake in another Indonesian lender, Bank Danamon, earlier that year.

Until then, Temasek's major investments had been mostly Singapore-centric. So BII, together with Danamon, marked the start of Temasek's overseas investments, as well as the beginning of its investments in foreign banks. Some questioned the acquisitions at the time, while others saw a political motive (buying the two banks, which were distressed entities restructured for sale by Ibra, was seen as contributing to Indonesia's recovery from the Asian crisis).

But there was also a clear commercial imperative: It was a genuine opportunity to buy financial assets at attractive valuations with the potential for strong returns — a theme that would run through to the present time.

Temasek went on to buy over Barclays and ICB's stakes in BII, and is estimated to have invested at least S$455 million in all in the bank.
Then came one of the regulatory shifts that have become all too familiar to Temasek. New foreign ownership rules under the Indonesian central bank's single presence policy, which takes effect by the end of 2010, meant that Temasek had to reduce its Indonesian bank portfolio by half.

Until late last year, the preferred option seemed to be a merger of BII and Danamon to meet the new rules. BII went as far as to say that it was drafting a proposal to merge with Danamon. The two banks complemented each other, said BII president-director Henry Ho.

Early this year, however, Temasek indicated that it was selling its BII stake. Eventually, an agreement to sell the stake to Maybank for US$1.1 billion was announced in March.

What led to the change of heart? First, it could be reflective of Temasek's growing caution, even disappointment, over the Indonesian market. The regulatory shifts and flip-flops in Indonesia, including that involving Temasek's telco investment

Indosat, suggested that reducing its Indonesian exposure might be a prudent option.
At the same time, while the financial sector in Indonesia appeared healthy, critics have charged that it was vulnerable to a sudden reversal of fortunes because of the inflow of hot money into the stock market and the spike, until recently, in international commodity prices.

The second factor might hold some irony. If the path to Barclays and Merrill had started with BII and Danamon, then the decision to sell BII could also be traced to Temasek's push west-wards. Temasek's investments in Barclays and Merrill, beginning last year, signified a new global thrust beyond regional acquisitions.

That meant realigning the portfolio, and raising funds for new investments by disposing of existing assets. There could be one more reason at play: the billions pumped into Barclays and Merrill, while undeniably long-term in nature, are currently sitting on huge paper losses. It would be nice to book a profit somewhere, and the sale of the BII stake to Maybank would have yielded a useful S$1 billion, according to some estimates.

Of course, in the neighbourhood scheme of things, Malaysian central bank Bank Negara put the brakes on the deal last month. Apparently, it was worried that Maybank could suffer losses from overpaying (not unreasonable, given that the price is 4.7 times over book) for BII. It is still unclear how things would pan out, but as it is, it is a setback for Temasek.

It is now forced to revisit its options for BII, including merging it with Danamon. And if Temasek continues to put the BII stake up for sale, it is unlikely to fetch a price as high as the one Maybank was willing to pay, given the circumstances.

Another lesson in the realities of investing in the region then. No wonder even ailing US and European banks look so attractive.
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Najib: Deal good for Maybank
New Straits Times, October 2008

Maybank's decision to acquire a controlling stake in PT Bank Internasional Indonesia (BII) was made before the global economic downturn, Datuk Seri Najib Razak said.
Therefore, he said, it was too late for Maybank to back out of the acquisition.
Asked if the move was a good idea considering the current state of the global economy, the deputy prime minister and finance minister said the decision was a commercial one which was up to Maybank to decide on without government intervention.
Najib, however, insisted that the move was still a good one for the country.

"It (Maybank) will own the fifth largest Indonesian bank and become a regional bank," he said at the cabinet's open house at the Putra World Trade Centre on Wednesday.

Maybank shelled out RM4.26 billion for a 55.6 per cent stake in BII on Tuesday.
It was given a RM759 million rebate after the original price was deemed too high given the current economic scenario.

The initial price was more than four times the book value of the bank, resulting in several parties demanding that a new deal, at two to three times the book value, be hammered out.

Maybank stood to forfeit its RM480 million deposit from the original tender if it pulled out of the deal.