DBS Group Considers Acquiring Shares in Malaysian Banks
DBS Group Holdings Ltd, Singapore's largest bank, is considering expanding into Malaysia by acquiring stakes in Malaysian banks. This maneuver involves contemplating a 29.1% stake in Alliance Bank Malaysia Bhd, which is currently valued at approximately $460 million. This stake is also owned by Temasek, Singapore's state investor, which holds a 28.9% stake, making it the largest shareholder of DBS.
Another opportunity for DBS to expand its presence in Malaysia could arise through the purchase of the retail banking assets of Kuwait Finance House, which are currently on sale and valued at over $500 million. However, these evaluations are at a very preliminary stage and any formal discussions would require the approval of Bank Negara Malaysia, the country's central bank.
DBS is the only bank from Singapore without a retail banking presence in Malaysia, attempting to establish itself in a market already served by local competitors Oversea-Chinese Banking Corporation and United Overseas Bank.
The bank's interest in expanding into Malaysia aligns with the improving economic outlook of the Southeast Asian country. Malaysia has witnessed growth in credit due to new infrastructure projects and investments. The Malaysian economy recorded its fastest growth in 18 months, expanding 5.9% year-on-year in the second quarter, driven by increased household spending, exports, and investments. The Malaysian ringgit has also been the best-performing currency in Southeast Asia this year.
Under the leadership of outgoing CEO Piyush Gupta, who has been in office for 15 years, DBS has transformed into a regional banking powerhouse. The bank made several acquisitions in August 2023, including Citigroup's retail banking business in Taiwan. Gupta had previously indicated that DBS was seeking additional acquisitions to support further strategic expansion in the region.
Tan Su Shan, the bank's corporate banking group head and deputy CEO, will take over as CEO in March 2025, becoming the first woman to lead the bank. DBS recently reported its highest quarterly net profit to date for the July-September period, thanks to record fee income.
DBS had previously attempted to acquire Temasek's stake in Alliance Bank in 2012, but regulatory challenges prevented the deal from going through. The current Malaysian government, led by Prime Minister Anwar Ibrahim, has shown a more open attitude towards foreign investments, which could positively impact DBS's expansion plans.
A spokesperson for DBS stated that they do not comment on market rumors and speculation. Temasek also declined to comment on the matter. Alliance Bank and Bank Negara Malaysia did not respond to comment requests made after business hours on Friday. Kuwait Finance House confirmed that the sale of its retail banking portfolio in Malaysia is in the early stages but did not provide further details.