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KUALA LUMPUR, July 24: Malaysia’s Maybank is set to buy another 5 per cent of MCB Bank as early as next month, in a deal estimated at $218 million, sources familiar with the matter said on Thursday.
Malayan Banking Bhd, Malaysia’s leading lender, bought a 15 per cent stake in MCB Bank, Pakistan’s top lender, for $680 million in May.
That deal included a clause whereby Maybank was obliged to buy up to another 5 per cent of MCB Bank shares within one year of the first transaction.
The price for this stake was then agreed at 490 Pakistani rupees per share, plus holding cost, with the total price not exceeding 510 rupees per share.
“The deal is very much on, the talks have started, and if all goes well, it should materialise sometime in August,” said a source close to the transaction.
A spokesman at Maybank declined comment. A spokesman at MCB Bank said any stake purchase by Maybank would be in line with the previous agreement, but he did not give a timeframe for the new purchase.
Shares in MCB Bank were up 5 per cent at 256.3 rupees.
The latest transaction, if it materialises, is likely to raise many eyebrows as banking analysts had previously said Maybank had paid a high price in its haste to expand.
Maybank paid 470 rupees per MCB Bank share in May. At 490 rupees a share, another 5 per cent stake would cost 15.39 billion rupees, or $218.4 million.
Long criticised for being too slow to expand overseas, Maybank suddenly sprang into action in March.
It bought 15 per cent of Vietnam’s An Binh Bank for $135 million, then a week later paid $2.7 billion for a controlling stake in Bank Internasional Indonesia. Then it acquired the MCB Bank stake.
Maybank shares have fallen more than 20 per cent this year, roughly in line with a drop in the broader market. By 0700 GMT, the shares were up 0.6 percent in a flat market.
High valuations
When Maybank bought into MCB Bank in May, paying 5.13 times MCB’s book value and an 11 per cent premium to the stock’s last traded price, it voiced confidence in Pakistan’s political outlook after February elections returned the nation to civilian democratic rule for the first time in almost a decade.
Pakistan, a key US ally, also sits on the frontline of conflict between Western forces and militants.
But markets have taken a beating since then.
Pakistan’s benchmark share index has lost about 20 per cent so far this year due to growing concerns on the state of the country’s economy as well as politics.
MCB Bank shares have since fallen sharply as well, hitting a year-low of 218 rupees on Tuesday -- less than half what they were when the initial deal was clinched in May.---Reuters
