DBS Alters Proposal to Acquire 30% of Alliance Bank Malaysia

Singapore’s largest bank, DBS Group Holdings Ltd., has amended its approach to acquiring a stake in Alliance Bank Malaysia Bhd., reducing its offer from a potential 49% to a maximum of 30%. This decision follows the withdrawal of DBS’s initial application after it was unable to secure approval from Bank Negara Malaysia, the country’s central bank. Typically, regulations limit ownership in local financial institutions to 30% without a waiver.

The revised proposal is expected to enhance DBS’s chances of receiving the necessary approval from the central bank. According to sources familiar with the situation, the adjustment positions DBS to negotiate with Vertical Theme Sdn., the largest shareholder of Alliance Bank. Vertical Theme is a Malaysian holding company that benefits from the backing of Temasek Holdings Pte., a state investor from Singapore, which holds a 49% stake in Vertical Theme through its subsidiary, Duxton Investment & Development Pte.. Temasek also owns approximately 28.3% of DBS.

While representatives from both DBS and Vertical Theme declined to provide comments on the matter, an Alliance Bank spokesperson stated that the company was not aware of the proposal. Additionally, the Malaysian central bank did not respond immediately to requests for comments regarding the revisions.

Acquiring a stake in Alliance Bank would provide DBS with a strategic foothold in the Malaysian banking sector, complementing the presence of its Singaporean competitors, Oversea-Chinese Banking Corp. and United Overseas Bank Ltd.. As Southeast Asia’s largest bank by total assets, DBS aims to expand its influence in the region.

In terms of market performance, Alliance Bank’s shares have experienced a decline of 6% this year in Kuala Lumpur, while the city’s main benchmark index has seen a modest decrease of less than 2%. As of now, Alliance Bank boasts a market capitalization of approximately 7.7 billion ringgit (about $1.9 billion).

With this strategic shift, DBS is positioning itself for a more favorable negotiation landscape, potentially reshaping its future in the competitive Malaysian banking industry.