Bank Negara Malaysia (BNM) has explained why it rejected Affin Holding Bhd's (5185) plan to take over rival EON Capital Bhd and it also gave an insight into how it handles takeover requests.
The central bank said it could not consider Affin's plan to take over rival EONCap because there were two issues which were not addressed.
"In relation to this specific case, BNM has communicated to the Affin Group on two issues that need to be addressed for the application to be considered.
"This is to ensure that there would not be any contravention of existing regulations and to ensure the sustainability of the merged entity," the central bank said yesterday in response to media queries.
It is understood that this means the ability of Affin to merge the two banks. If it could not do so due to opposition from minority shareholders, Affin may end up with stakes in two banking groups, which is not allowed under existing rules.
The second issue is the capital needs of a merged entity.
What this means is that Affin can draw up a new proposal, which addresses these issues, and make a new submission.
"The (Affin) group, however, did not pursue the matter any further," the central bank said in its statement.
Affin has also made it clear that it is moving on.
On June 11, Affin group managing director Tan Sri Lodin Wok Kamaruddin said EONCap is "off its radar" and it will pursue other opportunities.
On the same day, Affin's parent Boustead Holdings Bhd announced plans to buy 87 per cent of Pharmaniaga Bhd, Malaysia's biggest integrated pharmaceutical group, for RM534 million.
BNM also shed light on how it handles merger requests. The standard practice is to tell interested parties of the issues that need to be addressed and conditions that must be met before obtaining approval to proceed with the proposed acquisition.
"Further information is provided by the acquiring party in cases where they intend to proceed."
BNM normally takes two weeks, from the moment it receives complete information, to process any takeover requests, sources said.
By Shahriman Johari
No comments:
Post a Comment