DBS Group Holdings in Singapore’s central business district.
Nicky Loh Bloomberg Getty Images
Singapore’s largest lender DBS Group Holdings Ltd. Stock price history exploring expanding into Malaysia with the potential acquisition of shares in banks in Southeast Asia, including one of Malaysia’s smallest banks by assets, two sources said.
DBS is exploring buying from Singaporean state investor Temasek 29.1% stake in Alliance Bank Malaysia Bhd, said two sources with knowledge of the matter, a slice currently valued at about $460 million.
Temasek is DBS’s largest shareholder with a 28.9% stake, according to LSEG data.
Another option to expand into Malaysia includes buying Kuwait Finance House’s Malaysian retail banking assets, valued at more than $500 million and already sold, one of the sources said.
Deliberations are at an early stage, however, the sources said, and formal negotiations for the acquisition of shares in Malaysian banks require approval from Malaysia’s central bank, or Bank Negara Malaysia.
The two sources declined to be named as discussions about the possible acquisition are confidential.
“We do not comment on rumors and market speculation,” said a spokesman for DBS, Southeast Asia’s largest lender by assets. Temasek declined to comment.
Alliance Bank, Malaysia’s second-smallest bank by total assets, and Bank Negara Malaysia did not respond to requests for comment after business hours on Friday.
Kuwait Finance House said the process of selling its retail banking portfolio in Malaysia is at an early stage, and could not share additional information.
DBS is the only Singaporean bank that does not have retail banking in Malaysia. Local rivals Oversea-Chinese Banking Corporation and United Overseas Bank both have retail banking operations in Malaysia.
DBS’s plan to enter Malaysia comes amid improving economic prospects for the Southeast Asian country, with infrastructure projects and new investments expected to boost credit.
In the second quarter, Malaysia’s economy expanded by an annualized 5.9%, the fastest in 18 months, on higher household spending, exports and investment. The monetary unit, the ringgit, is the best performing currency in Southeast Asia this year.
DBS emerged as a regional banking powerhouse during Piyush Gupta’s 15 years at the helm, fueled by acquisitions that gave it a significant presence in markets including China, India, Indonesia and Taiwan.
DBS completed the acquisition of Citigroup’s consumer banking business in Taiwan in August last year. In July, Gupta said DBS is looking for bolt-on acquisitions that will support further strategic expansion in the region.
Tan Su Shan, who heads DBS’s institutional banking group and is deputy CEO, will take over from Gupta in March next year, making her the first woman to lead the bank. On Thursday, DBS published its highest monthly net profit for July-September with fee income.
DBS last tried to buy Temasek’s stake in Alliance Bank in 2012. That plan fell through due to regulatory hurdles, according to sources at the time.
The current Malaysian government under Prime Minister Anwar Ibrahim has gone further and is open to ideas and investments aimed at boosting economic growth, said a source familiar with DBS’s plans for Malaysia.
